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  1. Rice exports may crash 50% by 2020: Rabobank

Rice exports may crash 50% by 2020: Rabobank

India’s rice exports may crash 40-50% by 2020 from the current level, as production is expected to remain “stagnant” due to limited availability of arable land, Rabobank said in a report on Thursday.

By: | New Delhi | Updated: September 25, 2015 5:37 AM

India’s rice exports may crash 40-50% by 2020 from the current level, as production is expected to remain “stagnant” due to limited availability of arable land, Rabobank said in a report on Thursday.

The exports by India, which pipped Thailand as the world’s largest supplier of rice in 2012, will likely drop to 5-6 million tonne by 2020 compared with roughly 10 million tonne at present, said the Rabobank report, authored by its senior analyst (Food & Agribusiness) Shiva Mudgil. “The growth strategy for companies will shift to the domestic branded business with exports continuing to be an additional profitable revenue stream,” it added.

Rabobank sees considerable growth prospects for the domestic branded rice market in future, thanks to “changing customer preferences towards better-quality products and the growth of modern retail”. The size of the country’s branded rice market, which currently stands at $2.4 billion, is expected to rise to $3.5 billion by 2017, it forecasts.

Domestic rice companies have witnessed a compounded annual growth rate in the range of 20-30% in value terms over the past four years, it said.

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The country produced 104.8 million tonne of rice in the last crop year through June, down from a record 106.7 million tonne a year before, following a 12% deficit in monsoon showers from the benchmark level.

India — the world’s second largest producer and consumer of rice — accounts for 25% of the global exports of this grain. In the basmati rice segment, particularly, it has a 75% share in the global trade.

However, the report also flagged some challenges as well, especially in the supply chain. The rice milling and processing industry is highly fragmented and a lack of adequate storage capacity results in a waste of significant quantity of grains, including rice. “Given the constraints on land availability, high yielding varieties that require less water and inputs are critical. Although the government has supported the development of such seeds, their high costs keep the penetration low. Additionally, there is a pressing need to infuse professional management in the family-run companies,” it added.

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