As the world’s second largest rice producer after China, India has been an integral part of the world rice market as a steady exporter of basmati and non-basmati varieties since the early 1980s; and has often vied with other major exporters such as Thailand and Vietnam for top honours, but never quite achieved it.
It is for this reason that the country’s meteoric rise in 2012 to the pole position among world’s rice exporter is truly heartening and deserves to be complimented.
Production shortfall and rising internal prices forced the government to ban export of non-basmati varieties in 2007. Export of basmati, the long grain aromatic rice unique to the Indian sub-continent, continued albeit with some restrictions such as minimum export price. Despite staying out of the world non-basmati rice trade for four years, India seized the market opportunity as soon the export ban was lifted in September 2011.
Thanks to a combination of expanded production, large public stocks, weak currency and liberal export policy, the country shipped out a record 10.3 million tonnes rice in calendar year 2012.
Export shipments comprised seven mtillion tons of non-basmati and 3 mt basmati rice.
Export destinations were mostly African countries including Nigeria, Senegal, Ivory Coast and South Africa, in addition to Iran, Saudi Arabia and the UAE. African countries shifted to Indian non-basmati rice because of price competitiveness, particularly of parboiled rice. Shipment of 10.3 mt in 2012 represented a little over a quarter of world rice exports of 38.6 mt during the year, according to Food and Agriculture Organisation data.
Vietnam followed with 7.7 mt and Thailand 7.0 mt. In 2011, Thailand was the top exporter - it usually is - with shipment of 10.7 mt followed by Vietnam with 7.1 mt and India ranked third with 4.8 mt.
Interestingly, India’s remarkable export performance coincides with the decisive break above the psychological barrier of 100 mt rice production in 2011-12.
According to Agriculture Ministry, the country produced 105.3 mt in 2011-12 and 104.2 mt in 2012-13 according to the latest third advance estimate.
Consistent annual hike in minimum support price for growers, sustained procurement by government agencies, promotion of hybrid rice and focus on the System of Rice Intensification (SRI requires less water and chemical fertilisers) have combined to spur production.
It is well known that nearly 90 per cent of world’s rice production, consumption and trade take place in Asia.
No wonder, Asia remains the focus of attention of the rice market participants around the world.
milled rice market
Since 2010, the world milled rice market has remained fundamentally balanced with production (450 mt-465 mt) and consumption (445 mt-465 mt) very nearly matched.
World trade has been trapped in a narrow range of 36 mt-38 mt.
What’s the outlook for 2013?
On current reckoning, given the second highest level of production in 2012-13, large public stocks, liberal export policy and weak currency, there is a great opportunity for Indian to retain its top rank as rice exporter in 2013. The FAO has forecast that in 2013, Indian export will be 8.3 mt out of the world trade of 37.4 mt.
Reduction in export volume forecast is attributable to subdued demand from some key African markets including Nigeria, Senegal, Ivory Coast as well as Indonesia and Iran.
Although one can be sanguine that the country has broken the 100 mt production barrier, two key risks need to be watched - monsoon and prices. Onset and progress of the southwest monsoon during June-September period will have to be tracked closely for production prospects in 2013-14.
Given that general elections will be held early 2014, any strident price escalation in the domestic market for whatever reason may prompt a reconsideration of the liberal export policy.
Also, requirement under the proposed Food Security Bill will have to be met in full.