Steaming rice. India is China’s top rice supplier during January–August this year

India has become the top source of Chinese rice imports during January-August this year, with shipments in August alone accounting for 45 per cent of the total imports, the Foreign Agricultural Service (FAS) of the US Department of Agriculture (USDA) has said.

Quoting China’s General Administration of Customs of the People’s Republic of China data, the USDA’s Global Agricultural Information Network (GAIN) report on China’s rice prices said Indian rice made up 23 per cent of total imports by Beijing during January-August this year.

Broken makes up 97%

“Data suggests and trade sources point out that the increased volume of imports rests on cheap prices for Indian-origin rice which averaged at $345 per tonne compared with world average prices of $454,” it said. Myanmar and Pakistan quoted the next best at $368 and $433 a tonne.

Of the total rice imported from India, broken rice accounted for 97 per cent, a departure from China’s general trend of importing milled rice primarily. “Sources report that the imported rice was used mainly for animal feed as well as in rice-based liquor manufacturing or in snack food production,” the FAS report said.

But Priyanka Mittal, Director, KRBL Ltd, said the broken rice was also used for making rice noodles and other rice-based snacks in China.

The USDA report said China had begun importing a higher volume of between three and seven lakh tonnes a month since November last year against the normal 1-2 lakh tonnes due to higher demand for feed.

India most competitive

“India is providing quality rice at a competitive price ever since it returned to the export market in 2011. It is one reason why the country is making new inroads,” said an export-import official of a multinational firm.

“India is still the most competitive in the region compared to Pakistan, Thailand, Vietnam and Cambodia. It is perfectly placed to hold and even grow the market in China,” said Mittal.

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According to Vidya Sagar VR, Director, Bulk Logix, even Vietnam bought a good volume of rice during January-August this year. “They all bought broken rice for cattle feed. China, in particular, has bought through 7–8 exporters it has approved for buying rice from India,” he said.

BV Krishna Rao, President, The Rice Exporters’ Association (TREA), said exports to China had come amidst stiff competition from Pakistan.

Mittal said China began importing rice from India seriously only in October last year. “This was a welcome move by Chinese authorities. The decision came when international prices of other origins were 15-20 per cent higher than Indian prices last year,” she said.

Second-biggest buyer

During January–August last year, India’s rice exports to China were a meagre 124 tonnes. According to the Agricultural and Processed Food Products Export Development Authority (APEDA), China was the second-highest buyer of rice from India after Bangladesh.

China imported 5.9 lakh tonnes during April-August this year compared with 3.31 lakh tonnes shipped out the whole of last fiscal. “Of late, exports to China have slowed down. Shipments of broken rice continue to Indonesia and West Africa,” Sagar said.

Mittal said India has become the largest origin source for broken rice in West Africa. “Looking at export figures over the previous months, we continue to believe that India can service the entire broken rice demand for China as well given that it is the cheapest in the region,” the KRBL Director said.

Tough challenge

Sagar said sustaining the trend would be a tough challenge since domestic prices were increasing.

“The minimum support price for rice that is increased every year is an issue that could impact rice exports in the long term,” said TREA’s Rao.

Also see: India to flag concern with France, EU over GM rice

Mittal said China also imports a good quantity of long-grain white rice, but exporters are yet to see the demand emerging due to Beijing’s “apprehensions on quality and acceptance in the market”. However, she hoped Beijing will soon begin buying the long-grain white rice, convinced by Indian quality.

According to the KRBL director, China could have bought over 10 lakh tonnes of rice from India, primarily broken, till now this year and there was still an opportunity to tap the unexported segment of higher variants of rice.

Rao said India could face a stiff challenge from Pakistan, especially since its currency had depreciated against the US dollar. “Pakistan currency has made it very competitive now. It dumps all its stocks in the export market, though it is not a big player,” he said.

The USDA said broken rice prices from India and Myanmar were “so good” that Chinese traders did not apply for tariff rate quota that would entail a lower import duty. This, traders say, augurs well for India to export more.

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