Broken rice exports. Indian broken rice exports likely to face supply problems

The Indian poultry sector has begun using 100 per cent broken rice as  feed for animals, following the footsteps of countries such as China and Vietnam. This could result in exporters facing problems in sourcing broken grain for shipments, exporters say.

The Russia-Ukraine conflict since February 24 has resulted in wheat and maize (corn) supplies being affected, besides their prices surging, forcing consumers to shift to rice in view of its stable prices and assured supply.

Static prices

“In stark contrast to the record and near-record prices of corn and wheat over the past month, rice quotes have remained remarkably stable amid sufficient supplies and no disruptions to major exporters. In fact, quotes from India, the largest rice supplier, have been static and are currently below major export quotes for both wheat and corn, an anomaly,” said the US Department of Agriculture (USDA) in the “Grain: World Markets and Trade” put out by its Foreign Agricultural Service (FAS).

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In the global market, rice prices are ranging between $431 (Thailand five per cent broken white rice) and $323 (India 25 per cent broken white rice) free-on-board (f.o.b). On the other hand,  barring India quoting at $345 a tonne, the rest of wheat exporting nations are quoting it upwards of  $390 f.o.b. 

Pricier inputs

Brazil and the US are quoting maize above $350 a tonne f.o.b, Argentina at $311 f.o.b.  In addition, freight charges from the Americas are $60-80 a tonne higher compared to Asian countries. 

“We have begun using broken rice as a substitute for maize and wheat. All our input prices have soared and we are looking at various ways to cut costs,” said Vangili Subramanian, President, Tamil Nadu Egg Poultry Farmers Marketing Society (TNEPFMS). 

“Maize prices have increased to ₹2,600 a quintal currently from around ₹2,000 a quintal a few months ago. Wheat prices are up at ₹2,600 from ₹2,000, Even bajra, which we used to buy at ₹1,800 earlier, costs ₹2,400 now,” he said. 

“We were getting broken rice at ₹1,600 a quintal four months ago. It is now ₹2,100 a quintal,” said Vidya Sagar VR, Director, Bulk Logix. 

Export demand

Prices in India for wheat and maize have surged in view of the demand for exports after Russian troops entered Ukraine. This, in turn, has also resulted in prices of rice increasing. Broken rice, though, is ruling lower than the other two grains. 

At agricultural produce marketing committee (APMC) yards in  Uttar Pradesh, Madhya Pradesh, Rajasthan and Gujarat, wheat prices are ruling above the minimum support price of ₹2,015 a quintal fixed for this year. In fact, in States such as Gujarat and Madhya Pradesh prices are quoted at around ₹2,200. 

Maize prices, on the other hand, are quoted at around ₹2,2,00 in most states. 

“We are not fully utilising broken rice as poultry feed. We can’t replace maize totally since poultry animals are like humans. We have to make them adapt to the new feed slowly. Currently, 60 per cent of maize has been replaced,” said Subramanian. 

The change in the feed does not productivity or quality of the egg, though the colour of the yolk could be a bit lighter than the normal yellow. “It happens when you replace corn with even bajra or wheat,” he said. 

Ethanol production

Though rice is not usually used for feed due to its typically higher prices and less favorable nutritional profile, the use of small amounts for feed is not uncommon in large rice-producing countries, especially in East and South-East Asian countries like China, South Korea, Japan, and Thailand, the USDA said. “This year, China and Vietnam are importing significantly more broken rice that could be used for feed,” it said. 

Sagar said broken rice was in demand from overseas market for human consumption, particularly in Africa. “The Centre has allowed the usage of broken rice for the production of ethanol. This has also begun to affect its availability,” he said. 

“When broken rice is available at ₹2,000 a quintal, it is normal for the poultry sector to look at it as a substitute. The use of broken rice for ethanol is affecting supplies to some extent for exports,” said BV Krishna Rao, President, The Rice Exporters Association. 

“The use of broken rice by the poultry sector will make it difficult to source it for exports. Currently, kharif paddy arrivals are over and rabi arrivals are set by the month-end,” said Rajesh Paharia Jain, a Delhi-based exporter. 

Pakistan’s emergence

Sagar and Jain said broken rice is currently quoted at $320 a tonne.  

The USDA said though countries consuming wheat and rice usually tend not to look at substituting them when prices surge, the shift does occur in nations where both grains are used. 

“Sub-Saharan Africa is a price-sensitive region that consumes roughly equal amounts of both grains and may shift consumption to the lower-priced rice or local alternatives,” the FAS report said. 

Sagar said Pakistan is now supply broken rice with India running out of stocks. “But the demand for broken rice will ultimately result in higher rice production and thus, prices could drop,” he said. 

Jain said exporters could face problems when Rabi arrivals begin since the Food Corporation of India will also be in the market to procure supply through the public distribution system. 

The Chinese factor

The USDA said demand for broken rice is being driven in large part by attractive import prices in China. A majority of the imported volume is likely destined for feed, in part substituting for corn in feed rations. In addition, some broken rice is used for processed foods and liquor manufacturing, it said.

The agency said during July 2021-February 2022 period, China imported eight lakh tonnes of rice from India - over 90 per cent being broken rice - compared with 60,000 tonnes in the year-ago period. 

TREA’s Rao said the poultry sector could import maize under tariff rate quota (TRQ) to tide over the crisis. Under TRQ, the user industry can import maize at a concessional 15 per cent duty. 

Pointing out that maize and wheat prices have soared as Ukraine is a major wheat and corn exporter, the USDA said while Ukrainian quotes are no longer available as it scrambles to begin shipping via rail instead of by sea, Russia has resumed exports. 

This could result in some “levelling off” of prices and maize rates could ease a tad with the imminent South American harvest on cards. Prices, however, are likely to rule at “historically higher levels”. 

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