Thailand is likely to offer stiff competition to India in the global rice market this year with its production rebounding from the lows seen in 2019 and 2020. It is India’s only competitor in the parboiled segment of the rice trade.
According to the US Department of Agriculture, Thailand’s rice production during the 2021-22 season is projected at 20.8 million tonnes (mt) compared with 18.8 mt in 2020-21 and 17.65 mt in 2019-20. Production is expected to recover on better availability of water, an issue during 2019 and 2020.
As a result of the rise in production, Thailand’s rice exports this year are likely to be 31 per cent higher at eight mt tonnes against 6.1 mt last year, said USDA’s Foreign Agricultural Service (FAS) post in Bangkok. Higher exports have been forecast mainly in view of a weaker Thai baht.
“Thailand parboiled rice prices have dropped to match with Indian prices. They are $20-30 more than Indian prices,” said Nitin Gupta, Vice-President, Olam Agro India Ltd.
Currently, Indian parboiled rice 5 per cent broken is quoted at $370-376, while Thailand is quoting $395. “Thailand’s exports are expected to increase to 8 mt from 6-6.5 mt last year,” Gupta said.
70% of exports to Africa
“Some buyers find it better to buy Thai rice as its quality is rated better than Indian variety. Therefore, volume of exports is likely to increase,” said Vidya Sagar VR, Director, Bulk Logix.
The USDA’s Bangkok FAS Post said Thai parboiled rice was more competitive with Indian parboiled rice and some 44 per cent of exports last year went mainly to South Africa, Benin, Cameroon, and Angola. Of this, 70 per cent was parboiled rice.
“Higher domestic price for parboiled rice and problems of transportation have created uncertainty over Indian parboiled exports,” said Sagar.
The movement of parboiled rice from Chhattisgarh to Kakinada ports in Andhra Pradesh was affected due to a shortage of rail rakes, though the situation has begun to ease.
On the other hand, the Union Government is procuring parboiled rice in Chhattisgarh at nearly ₹20 a kg and offering it to traders at ₹24, making things difficult for exporters, the Bulk Logix director said.
Stiff internal competition
“There will be a strong demand for (Thailand) white and parboiled rice as traders speculate that Thai rice export prices will remain more attractive than Vietnamese and Indian rice,” said the USDA Bangkok FAS Post.
“Indian parboiled exports could also face problems since the Prime Minister Garib Kalyan Anna Yojana will end in March and some shippers could find it difficult to source,” said an industry source on the condition of anonymity.
However, The Rice Exporters Association President BV Krishna Rao said India will be able to take on Thailand in the global rice market. “The problem for Thailand is that it has only a handful of exporters shipping rice, whereas there are many in India. Also, rice is exported from many ports in India,” he said.
While India enjoys a logistical advantage as it is nearer to African destinations, there is intense competition among exporters in the country. “Indian exporters are trying to undercut one another,” Rao said.
According to the TREA president, barring countries such as the Philippines and Malaysia Indian rice is now accepted widely in almost all countries. “Recently, the Commerce Ministry helped conduct a buyer-seller meet with the Philippines Ambassador, who has agreed to look into our request,” he said.
The problem with exporting to the Philippines is that Filipinos prefer “soft” rice which Vietnam supplies, whereas Indian the Indian variety is “hard”.
On the other hand, Malaysia prefers Pakistan rice, which is easy to blend with domestically-grown rice. “Pakistan rice is 6.2 mm in length and can be easily mixed with Malaysia’s 6.4 mm rice. Indian rice length is 5.-7-5.8 mm and thus loses out,” Rao said.
The TREA president also expects China to buy more broken rice from India, though there were risks of its prices rising in case of a surge in corn prices.
No 1 ranking to continue
However, the Indian rice trade is unanimous that India’s position as the number one rice exporter will remain unchallenged.
“India’s ability to supply both parboiled and regular white rice at competitive prices will also propel exports to Sub-Saharan Africa where imports are projected to grow,” the USDA said.
As of February 11, Indian white rice 25 per cent broken is quoted at $347 a tonne compared with Vietnam’s $389 and Thailand’s $403 (both for 5 per cent broken), the International Grains Council data showed. Rice export prices are 12 per cent lower in India, 24 per cent in Vietnam and 25 per cent Thailand year-on-year.
India’s rice exports have also been helped by higher stocks with the Food Corporation of India, which as of January 1 was 22.15 mt of rice and 47.36 mt of paddy (31.72 mt of rice).
Record rice production of 118.87 mt in 2019-20 and 122.27 mt last season (July-June) has also aided the record shipments.