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Rice export chances remain bleak

G. Chandrashekhar

MUMBAI, Oct. 11

ASIAN rice supplies could get somewhat tighter and import requirements expand sizeably over the coming months, but Indian rice is unlikely to be a major beneficiary of changes in the market conditions because of unworkably high prices.

Paddy crop in a number of major producing countries such as China, Vietnam, Bangladesh and the Philippines is expected to be slightly lower in 2000; but ample stockpiles of previously harvested rice are expected to put a lid on price rise.

However, the recent flooding of many parts of Southeast Asia may lead to some decline in rice production, especially in Vietnam, Cambodia and Laos, and to a lesser extent in Thailand. Bangladesh has also been affected by floods that have reportedly destr oyed a part of the crop.

More important than the anticipated decline in output is the expectation of a robust growth in demand for the fine cereal in 2001. World rice trade during the year is forecast to expand by a healthy two million tonnes (m.t.) to reach 24 m.t.

The main demand driver will be Indonesia which is likely to import about three m.t. next year. This follows three years of stagnant domestic paddy output (about 50 m.t.). With signs of improved economic performance, Indonesia has apparently put the finan cial crisis of 1997 behind it.

Rice import requirement of Indonesia is projected to expand in 2001 because of unchanged domestic supplies and increasing demand. From two m.t. projected for the current year, import requirement for 2001 is forecast at three m.t.

Other markets that may show a sizeable additional import are Bangladesh and Iran. Many believe the former may have to import up to one m.t. in 2001, double the quantity projected for the current year. Iran's import is also likely to rise by four lakh ton nes to 1.4 m.t.

These developments in the marketplace are however unlikely to help India in any big way, although the country produced a record quantity of rice (88 m.t.) in 1999-2000; currently carries about 13 m.t. of buffer stocks; and is again faced with a fairly la rge kharif harvest.

Compared with competing origins, Indian long grain (non-basmati) rice is at least $30-40 per tonne more expensive. In addition, problems of logistics discourage overseas buyers. Many consider sourcing rice from India as a last resort. The only possibilit y of export is to Bangladesh because of geographical proximity of the market which reduces freight cost.

Obviously, should India export respectable volumes of rice over the next six months, unusual ways and means of marketing will have to be explored. One way is to seriously pursue counter-trade possibilities. This calls for quick and aggressive action on t he part of the Government.

For instance, both Indonesia and Malaysia from where India imports large quantities of palm oil are importers of rice. These countries could be targeted. Malaysia's projected imports are 5.5 lakh tonnes. Sri Lanka, too, is an import market, a small one t hough, for one lakh tonnes.

The rice exporters association recently floated the idea of rice supplies to Russia against import of arms. This may be pursued, although commercially more sensitive commodities such as tobacco, tea and coffee deserve to get priority over rice for Russia .

However, if recent experience is any guide, New Delhi is unlikely to act decisively and soon. No one in the Government seems to have the time and commitment to address foodgrains management issues. We saw the Government take some perfunctory steps for wh eat exports; but nothing came out of it as anticipated. Rice may go the same way as wheat and continues to remain in warehouses, adding to the cost and rendering it increasingly more uneconomic both for the domestic and export markets.