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M.R. Subramani

Chennai , Oct. 15

INDIA is all set to lose the race to Vietnam for the number two position in world rice exports after the foodgrain shipments have come to a total halt in the last two months.

Exports have come to a standstill in view of the Government suspending allocation of rice for exports from the Food Corporation of India (FCI) stocks. Before the suspension, it also raised the prices of rice sold for exports from August 1 to Rs 7,300 a tonne for white rice against the earlier price of Rs 6,610 and Rs 7,500 for par-boiled rice (Rs 6,915).

"These measures have depressed export prospects for the country from (the earlier projected figure of) 4 million tonnes (mt) to 3.8 million tonnes, a pronounced drop compared to the outstanding 6.6 mt performance of last year," says the Food and Agriculture Organisation (FAO) in its outlook.

The latest FAO outlook pegs rice exports from Vietnam at four mt, up from the earlier projection of 3.9 mt. This is substantially higher from 3.2 mt it shipped last year. "By the end of July, the country had already increased its deliveries by 50 per cent compared with the first seven months in 2002," FAO said.

Rice exporters said nothing could be done on the export front as the Government had suspended exports on depletion of stocks. Initially, the suspension was on the grounds that the Railways had to clear all allocations made by FCI to exporters.

As on September 1, rice stocks had dipped below the mandatory level of 10 mt to 7.1 mt, while that of wheat was above the norm of 14 mt at 20.74 mt. During the same time last year, rice stock was around 17.52 and wheat at 37.9 mt.

"Nothing is happening on the rice export front. Shipments have been zero during the last two months," said Mr Rajnikanth Rai, Vice-President-Operations, ITC International Business Division.

"Right now, there is no demand even for Indian rice because our prices are uncompetitive," according to Mr Atul Chaturdevi, President (Agro), Adani Export Ltd. Compared to Vietnam, Indian prices are higher by $8 a tonne. Though India enjoys freight advantage when it comes to shipping to Africa, lack of allocation is affecting trade.

Exporters can buy rice from the open market but it is not as competitive as sold by FCI.

During the weekend, 25 per cent broken PR 106 white rice was quoted at $175 a tonne f.o.b. Indian ports in the cash market and Vietnam's 25 per cent broken were quoted at $168 a tonne. Similarly, India's five per cent broken were quoted at $196 a tonne f.o.b. to Vietnam's $187. In fact, Thailand's five per cent broken was lower than India's at $195 f.o.b. However, on Tuesday, the price difference between Indian and Vietnam rice dwindled to $2-3 a tonne.

While Thailand is seen maintaining its numero uno position in rice exports, shipping 7.5 mt this year, Sri Lanka's entry in the export market has stirred up things. The island nation has reaped a record rice production this year with the easing of the Government-LTTE standoff and, as a result, it could export at least one lakh tonnes.

Myanmar, another nation that offers stiff competition to India, is seen exporting nine lakh tonnes.

"There is unlikely to be any export activity until the beginning of November. The Government should be reviewing the suspension of exports then and basically, it will depend on the stock level," Mr Rai said.

Kharif rice production is seen near the record 75 mt this year on widespread rain in the country and exporters hope that the Government may revoke the suspension.

"Since a bumper crop is expected, there may be a relook at the export prospects," Mr Chaturvedi said.

Trade sources say prices too could decline once the new crop starts arriving. "But we will have to create demand. That can happen only if we have a proper policy," they added.

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