The Hindu Business Line : Rice exports booming at Kakinada old port

More than a million tonnes of rice have been exported from the port to different countries this financial year, and the number is expected to go up in the next few months.

Ch. R.S. Sarma

Rice exports are keeping the old (anchorage) port at Kakinada busy for the second successive year. In spite of the dollar crash, already more than a million tonnes of rice has been exported from the port to different countries during the current financial year. Trade sources are of the opinion that exports will go up in the next two or three months and the old port can easily handle 3 million tonnes of total cargo by the end of the financial year, as it did last year, with rice exports accounting for the lion’s share.

Kakinada old port has an excellent hinterland for rice export, as the Godavari and Krishna deltas grow the required rice and there is a thriving milling industry in the two Godavari districts and Krishna.

But the millers have a levy obligation, as they have to sell a stipulated quantity of rice to the Food Corporation of India (FCI) for the buffer stocks, keeping in view the country’s food security; only then are they allowed to sell the remaining stocks in the open market (domestic market) or export it.

For the past two years, the millers in East Godavari, in particular, have been unable to meet the levy target in full, as they are finding it easier to sell the rice to exporters than to the FCI.

Many of the millers find the norms fixed by the FCI too stringent and often, it is said, rice rejected by the FCI is found suitable for exports.

In accordance with the AP Rice Procurement (levy) Order, 1984, millers have to supply 75 per cent of the rice to the FCI. For the current crop year, ending in September, the East Godavari district, where the Kakinada port is situated, has been given the levy target of 8,41,09 tonnes of rice but till now only 6,88,340 tonnes has been procured. There is thus likely to be a considerable shortfall.

PDS rice diversion

There are also allegations that rice meant for the public distribution system (PDS) is being diverted for exports, and raids have been conducted by Civil Supplies Department officials on some warehouses. Stocks have been seized.

This has brought disrepute to the rice exporters who, however, claim that they are not personally responsible for any such diversion. The exporters argue that they buy the rice from the millers in good faith, and there is no mechanism to check whether the millers are diverting the rice.

Mr D. Surya Rao, the president of the Cocanada Chamber of Commerce, has urged the State Government to set up check-posts at the port and develop checks and balances to prevent diversion of rice.

“The rice exporter cannot be penalised. Seizure of stocks results in heavy demurrages and the exporters may not be able to meet their export obligations and delivery schedules, if the Government adopts such methods.

The reputation of the port will suffer. Therefore, by all means, steps should be taken to prevent diversion of PDS rice, without affecting the exports,” he argues.

Infrastructure

There is also the question of improving the infrastructure at the old port, especially construction of new steel barges to meet the needs of rice exporters.

There are, at present, only 90 barges or so in functional condition and there is no doubt that more are needed. But there are objections from the existing steel barge owners that the port authorities should not give licences to newcomers for steel barge construction. The issue is still pending in the court.

Mr B. Ramamurthy, the president of the Kakinada Steel Barge Owners’ Welfare Association, is of the view that the State Government has to take a long-term view of rice exports and build up the infrastructure at the port accordingly.

“Ad hoc policies and decisions cannot be taken, because there is a boom in rice exports for one or two years. Barge owners have invested heavily and suffered for years, when there was not enough cargo in the old port, and now they are heaving a sigh of relief. However, it is to be seen how long the boom will last. We are not averse to construction of more barges,” he says.

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