Buyers, sellers and freight firms have adopted a “give and take” policy to overcome the curbs imposed by India on rice exports even as Thailand and Vietnam are mulling increasing the price of the cereal in the global market. 

“India’s curbs on rice exports have disturbed the market heavily. But my experience is that sellers have cut the prices by $30 a tonne, buyers have increased the offers by $20 a tonne, while freight firms have reduced charges by $250 per container,” said VR Vidya Sagar, Director, Bulk Logix. 

Buyers willing 

“Rice within port premises are moving. But new consignments are not being taken inside since the trade has to come to grips with the new development. The curbs have brought down prices of premium variety rice,” said BV Krishna Rao, President, The Rice Exporters Association of India (TREA). “Buyers in Sri Lanka, Singapore and Indonesia are willing to pay the export tax,” said S Chandrasekaran, a trade analyst. 

India imposed curbs on rice exports from September 9 by banning shipments of broken rice and imposing a 20 per cent export duty on brown rice, paddy and non-basmati white (raw) rice. The Centre, however, exempted parboiled (boiled) and Basmati from the curbs. 

Floor price likely

The curbs were imposed to manage a tight food situation with foodgrain stocks dropping to their lowest since 2017 at 49.28 million tonnes (mt) besides 16.16 mt of milled paddy (11.31 mt of rice) as of September 1. While rice stocks are lower than last year at 24.46 mt, wheat inventories at 24.82 mt are at a six-year low. 

Amidst this development, Thailand Cooperatives Minister Chalermchai Sri-on will meet Vietnam Agricultural and Rural Development Minister Le Minh Hoan on October 6 for discussion, including increasing export prices of rice. “Thailand and Vietnam jointly plan to increase the price by 20 per cent. Perhaps, they may set a floor price for shipments. This could make Indian export curbs null and void,” said Chandrasekaran. 

Review likely

The move by South-East Asia is because they view their rice as a premium one over Indian rice. But the Indian exporting fraternity says export curbs could be reviewed soon, particularly once the kharif rice production picture becomes clear. “If the Indian paddy crop size turns out to be good, India will review its duty, which has a net duty effect of 26 per cent since there are additional charges apart from the 20 per cent basic customs duty,” said Delhi-based exporter Rajesh Paharia Jain. 

“We also expect the Centre to review the export curbs and relax once the picture becomes clear on demand and supply,” TREA’s Rao said. 

According to the Thai Rice Exporters Association, prices of Indian 5 per cent broken white rice have increased by $27 to $365-69 since the ban . At the same time, prices of Vietnam 5 per cent broken have increased by $10 to $403-407. Thailand prices are up $13 to $444 and Pakistan by $35 to $413-17. 

Pakistan flood impact

Similarly, 25 per cent broken white rice prices are up $30 a tonne from India, while Thailand and Vietnam have hiked the rates by over $10 and Pakistan by $35. On the other hand, while Indian and Pakistan parboiled rice are quoted at unchanged rates, Thailand has increased the price by $20. 

“Countries such as Vietnam and Thailand have increased the prices as they don’t have any cargo. Pakistan prices are up as its crop got affected badly in the floods last month,” said Jain. 

“We have begun getting enquiries from countries such as Vietnam and buyers are prepared to pay a higher price due to tax,” said M Madan Prakash, President, Agri Commodities Exporters Association (ACEA). Buyers, however, are taking time to adjust to the hike in prices, he said. 

Shipments may drop

Chandrasekaran said Thailand and Vietnam will likely set up an institutional mechanism to fix rice prices since their farmers were struggling with rising production costs. 

Bulk Logix’s Sagar said India might also resort to fixing a floor price for rice exports if the current trend continues. 

Jain said while parboiled exports are likely to increase, shipments of white rice could drop to 5-6 mt from 9-10 mt. “Overall, exports of non-Basmati are likely to drop to around 10 mt,” he said.

According to the Agricultural and Processed Food Products Export Development Authority (APEDA), non-basmati rice exports increased to 5.81 mt during the April-July period of the current fiscal against 5.28 mt during the same period a year ago. Earnings from shipments improved to $2.08 billion from $1.91 billion.

Last fiscal, India shipped out a record 17.26 mt of non-basmati rice fetching ₹45,649.74 crore against 13.08 mt earning ₹35,448.34 crore in 2020-21. Over the last couple of years, India’s rice exports have been driven by record production. Last crop year (July 2021-June 2022), India produce a record 130.29 mt of rice. This year, prospects have been affected by inadequate rains in key growing areas such as West Bengal, East Uttar Pradesh, Jharkhand, Odisha and Chhattisgarh. 

However, a YES Bank Agri Economic Survey said kharif rice production will be higher despite deficient rainfall in some key growing States.