Commodities

Freight rates weigh on rice exports

Vishwanath Kulkarni Bengaluru | Updated on June 18, 2021

Rice prices are largely stable in the international market   -  The Hindu

Africa may slow down purchases as charges rise to $115/tonne from $45

Rising freight rates are seen weighing on the exports of non-basmati rice this fiscal. Exporters fear that buyers, mainly from the African countries, may slowdown purchases in the near-term as freight rates have more than doubled over the past one year.

“There will be a slowdown in purchases due to higher freight rates, mainly from buyers in Africa. They will ultimately buy, but may wait for some time,” said BV Krishna Rao, President of The Rice Exporters Association.

Africa, the biggest buyer

African nations are the biggest buyers of the Indian non-basmati rice. Africa as a market accounted for 54 per cent of India’s $4.796 billion non-basmati rice shipments during 2020-21. African countries imported rice valued at $2.599 billion during 2020-21 and Benin was the largest importer valued at $443 million.

Freight rates to Africa have more than doubled to $115 per tonne compared with $45 tonne a year ago. An African buyer, who used to get rice delivered at $400 per tonne last year has to pay $500 now. “There will be some resistance due to the price increase and slowdown in purchases, but ultimately they may come back,” Rao said.

Vietnam moves slow

Already, Vietnam has slowed down the non-basmati purchases from India, Rao said. Vietnam had already half a million tonnes of white rice and brokens and may start buying later.

The demand for non-basmati rice increased to a record high of 13 million tonnes last year as more countries bought the cereal amidst supplies issues in ASEAN region and raging Covid pandemic to ensure food supplies.

India’s non-basmati rice exports surged 136 per cent in dollar value terms during 2020-21 to $4.796 billion compared with $2.031 billion in the previous year.

South Asia, as a region, was the second largest buyer of Indian non-basmati rice at $785 million, while shipments to ASEAN countries were estimated at $357.

Rice prices are largely stable in the international market, while corn and soya has eased over past two days. Rices prices are unlikely to come down as Indian prices are already at rock bottom, Rao said.

Increased MSP

The Centre has hiked the minimum support price (MSP) for paddy by ₹72 per quintal to ₹1940 for the kharif marketing season 2021-22. The Government has set a high rice production target of 104.3 million tonnes for the ongoing kharif season.

Exporters feel that the increase in MSP may help farmers expand the area under paddy aided by forecast of a normal monsoon. At the same time, exporters fear that the higher MSP may also deter exports. The Government should evolve a suitable mechanism wherein the exports are not affected with the annual MSP ritual, an exporter said.

Published on June 18, 2021

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