The Hindu Business Line : High rice prices force global buyers to go slow

What's cooking?
Some decent deals with West Africa have been witnessed.
Rising oil prices and freight rates working to India's advantage.
Withdrawal of the target plus scheme has embittered some traders.

Chennai , May 12

With Pakistan running out of stocks, Indian white rice is witnessing some demand. However, high prices for the grains are forcing buyers to go slow. Par-boiled rice exports, on the other hand, continue to be competitive with Thailand being out-priced by a minimum $50 a tonne, according to trade sources.

"Pakistan has exhausted its white rice stocks. Therefore, we are witnessing some decent deals, especially to West Africa," a trade source said.

FARM ECONOMICS

But the problem is that prices are far higher that various governments are looking at "farm economics". Still, India has been able to gain better foothold in the white rice market.

"Currently, the only competitor in the white rice segment is Vietnam. But the import tender of the Philippines has tied it down. That gives some legroom for Indian white rice," the sources said.

On the par-boiled rice front, "India's only competitor Thailand has priced its grain $50-60 higher. Plus to sell to countries in Africa and the Gulf, India enjoys a clear freight advantage," they said.

"The rising crude oil prices are only benefiting India since freight charges are increasing," the sources said.

DEMAND IN BULK FORM

A trading source in Mumbai said demand was good for par-boiled rice from South Africa and the Gulf. "The demand is in bulk form. On the other hand, branded rice is witnessing demand from the European nations," the source said.

"Right now, only India seems to be having white rice stocks. That is working to our advantage," the source said.

Currently, Thailand's white rice 25 per cent broken is quoted at $268 a tonne, while the Indian grade is ruling at $236 and Vietnam at $250. Parboiled 100 per cent sortexed from Thailand is ruling at $298, while Indian PR parboiled five per cent is quoted at $270.

TARGET PLUS SCHEME

However, a trading house in New Delhi said exports are witnessing a slowdown since the Centre has withdrawn the target plus scheme. The scheme envisaged higher duty free entitlement if the export houses churned out a higher turnover in shipments.

"The target plus scheme encouraged exporters to fully go out and get new business. The withdrawal of the scheme for 5-6 of the main commodities has come as a dampener to exporters," an official of the trading house said.

"As a result, there is a bit of slowdown in shipments of rice," he said.

Earnings

According to the Agricultural and Processed Food Products Export Development authority, during April-December of the last fiscal 31.79 lakh tonnes of non-basmati rice were exported against 19.67 lakh tonnes the previous year. In terms of value, earnings were up to Rs 3,332 crore against Rs 2,138 crore.

But other trade sources said the target plus scheme resulted in under-cutting of price by some of the exporters. "It was a situation similar to the one witnessed when the Food Corporation of India offloaded its excess stocks at throw-away price a couple of years ago. At that time, when global prices for rice were $180 a tonne, we were quoting $135. Only a few people have benefited from this," they said.

But the New Delhi trading house official said the sudden withdrawal of the scheme has put a question mark on some of the deals struck by them. "It is affecting our commitments to international buyers," he said.

However, trade sources said the country has begun to make a mark in rice exports and has started to be a reliable trading partner.