Commodities

Rice exporters to gain from lower freight charges

Vishwanath Kulkarni Bengaluru | Updated on March 12, 2021

Railways changes loading norms for paddy, slashes rates by 19%

The movement of paddy from northern States such as Bihar and Uttar Pradesh to the South will turn cheaper as the Indian Railways has slashed the freight rates for the commodity by up to 19 per cent by changing the loading norms. This is expected to benefit the rice exporters in terms of lower freight costs.

Loading norms

Rice exporters buy significant volumes of paddy from the northern states to process it in South, mainly in Andhra Pradesh for exports.

The Ministry of Railways has reduced the permissible carrying capacity of wagons effective March 12 for a period of one year till March 11, 2022. As a result, the permissible carrying capacity will now be 52 tonnes for paddy, uniform for various types of wagons against the earlier range of 59-64 tonnes. In other words, the per wagon billing for paddy will now be calculated for a flat 52 tonnes for all types of wagons and routes.

Compared to rice, flour and pulses, paddy occupies more space in the wagons. As a result, the loaded quantity of paddy per wagon would be much less around 50-52 tonnes compared with 64 tonnes for rice, exporters said.

“Till now, we used to pay excess freight of around 19 per cent while transporting paddy through the rail wagons. Now that the loading norms have been revised, the extra charge is removed and that will be helpful for the trade in general,” said BV Krishna Rao, President of The Rice Exporters Association.

Logistics costs

Millers and exporters purchase paddy from the open market in surplus producing States of Chhattisgarh, Uttar Pradesh, Bihar and Jharkhand among others and move it to their processing units in Andhra Pradesh for milling and export the cereal. Interestingly, in these States the public procurement is relatively lower compared to Punjab and Haryana, making them attractive for the millers.

Citing the Railways figures, Rao said about 1.5 million tonnes of paddy is moved by the private trade through the network from these States. Rice millers prefer to use the rail network while transporting paddy for distance over 1,000 kms, while for a shorter haulage they depend on the road transport. Considering that the fuel prices are on the rise, the railway’s move to revise the norms could attract more traffic. Logistics account for about 15 per cent of the cost of the produce such as rice.

India’s non-basmati rice exports have registered 129 per cent increase for the April-December period at 8.21 million tonnes as global supply shortage has forced many a countries to purchase the cereal from India, the second largest producer.

Published on March 12, 2021

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