The Hindu Business Line : More curbs on rice exports to ensure domestic availability

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More curbs on rice exports to ensure domestic availability

Move could hit export of speciality rice from South

G. Srinivasan

New Delhi, March 6 The Directorate General of Foreign Trade (DGFT) has hiked the minimum export price (free on board) of non-basmati rice from $500 to $650 per tonne and also slapped port restrictions.

DGFT also fixed the minimum f.o.b export price of basmati rice at $900 per tonne. In the case of rupee-based non-basmati rice exports to the Russian Federation, the minimum f.o.b export price has been hiked from Rs 20,000 per tonne to Rs 26,000 per tonne.

Ports through which non-basmati rice exports are permitted include Kandla, Kakinada, JNPT in Mumbai and Kolkata, depriving exporters access through other major ports such as Kochi, Vizag, Chennai, Mangalore and Tuticorin.

This could impact export of a few speciality rice of South India such as Ponni and Matta (red rice from Kerala). South Indian non-resident Indians in Singapore, Malaysia, UAE, Kuwait, Saudi Arabia, Europe and the US would feel letdown by their increasing costs.

When contacted, Secretary, South India Rice Exporters Organisation, Mr P. Vishnukumar, told Business Line that the f.o.b export price of non-basmati rice has been hiked regularly, from $425 a tonne in October 2007 to $500 a tonne in December 2007 and now, to $650 a tonne.

Sale trail

At this latest rate, the export price has gone up to Rs 26 per kg, whereas it is sold at Rs 22 per kg in the domestic market. On the other hand, export price of basmati rice abroad is Rs 36 per kg while in the domestic market it is sold above Rs 45 per kg.

He said that in the case of basmati rice, the export price fixed is a sort of subsidy whereas in the case of non-basmati premium rice varieties, the minimum price fixed now acts as a deterrent to exporters.

He said that at a time when competitors like Thailand, producing similar premium varieties, are selling in the overseas market at $480 per tonne, Indian premium non-basmati rice has been earning $500 per tonne.

With the new minimum f.o.b price, the Indian premium varieties would be at a cost disadvantage.

Exporters from Tamil Nadu and Kerala would be hit by port restrictions as the Kakinada port does not have container cargo facilities and taking this either to Mumbai or Kolkata would add to freight cost, rendering their products further uncompetitive.

Complaints from South

Rice exporters from the South in general complain that the new policy clearly discriminates the speciality rice exporters of the region, while promoting the export interests of the rest in the country.

Considering the fact that North India has surplus rice production and South has short supply, the present policy matrix would divert available supply from the North to elsewhere, including overseas markets.

They further plead that if the Government does not come out with special policies such as tariff rate quota on Ponni and Matta rice, there would be a virtual halt in export of speciality South Indian rice, given the highly uncompetitive status to which the premium non-basmati rice varieties has been consigned to by policy changes.

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