IN A DECADE (2007-17) INDIA’S RICE EXPORTS= 75 MILLION TONS OF Rs 276000 CRORES
RICE (Basmati+Non-Basmati) export of 75 million tons (mts) in a decade of 2007-17 with forex earnings of Rs 276000 crores—which as per current $/rupee parity equals $42.5 billion, is one of the most notable features of India’s trade thrust. This would be even more in dollar terms if lower rupee- dollar is factored for previous years. Thailand stands at number one with export of 90 mts rice in the same period while India at number two (see charts) and Vietnam with 62 mts at number three.
India would have surpassed Thai’s highest figure--but for three year ban (from 2008 to 2011), imposed by the then Government on export of Non-Basmati rice. India suffered “export loss” of atleast 16-17 mts of rice during prohibited period while there was no scarcity of cereal in that triennium. India has never imported rice on government account for last 25years or so and thus has a record of self-sufficiency. All rice exports are from private stocks—thus keeping food security fully insured through FCI and its agencies.
If last five years data is analyzed, then India shipped out @10.9 mts each year-- 54.5 mts vs 47.5mts of Thailand-- because no ad-hoc tweaking in export policy is done by GOI. That is how it should be. Exports require unrestricted access to markets and any ban or change in policies entails handing over clients abroad to competition. Thailand, due to its Government’s irrational paddy pricing policy of 2011, outpriced itself from African/ Asian markets. Its rice quality suffers due to processing from old damaged paddy.
In 2017-18 too, India is likely to maintain annual shipments of 11-12 mts of rice in a world trade of 42 mts. This sustained success should be highlighted in all international fora to build India’s brand image as a quality and quantity exporter of rice.
Government’s program to “Bring the Green Revolution to Eastern India (BGREI)” through improved technologies launched in 2010 has realized significant productivity gains in Bihar, Chhattisgarh, Jharkhand, eastern Uttar Pradesh, West Bengal, and Odisha.
India’s annual production is about 110mts of milled rice; opening stocks of 19mts; total availability is 129mt vs local consumption of 100mts+exports of 11mts, thereby leaving surplus of 18mts as of now.
India lacks presence in South East Asian market of Indonesia, Philippines and China where Thailand/ Vietnam dominate because of logistics and historic continuity. China too is turned regular importer of 4mts annually where our presence is negligible.
Total annual production of Basmati is about 10 mts. Saudi Arabia, Iran, Iraq UAE, Kuwait remain prominent markets of 3-4 mts of Basmati rice annually. Basmati Pusa 1121and 1509 varieties released respectively in 2003 and 2013 by IARI in parboiled form has proved to be a boon for the farmers/millers and buyers in Iran/ Saudi Arabia as it is 40% cheaper than traditional Basmati with grain length of 20mm after cooking. It is currently trading at $1150 fob vs $900fob last year. Thai fragrant rice competition is subdued with Pusa 1121. Sortexed capacities involving optical and electronic sorting machines have been upgraded by rice millers for uniformity in color/ quality. Prominent rice exporters are also targeting USA and EU—though they keep raising issues of Minimum Residue Levels of fungicide which adversely affects volume and velocity of exports.
Nigeria and Francophone countries of West Africa (Benin Liberia, Mali, Guinea, Senegal, and Ivory Coast) South Africa, UAE are some of the major destinations of Indian Non-Basmati rice of 6-7mts per annum. Trade with African nations is preferably done through intermediaries in France/Switzerland/UAE to ensure payment. In addition to 25% broken white rice, India is prime player in 5% parboiled and 100% broken white silky Sortexed rice. Multiple varieties of rice like—Pant 4, IR64, IR36, IR8, 1001, Sona Masoori--offer choices for right pricing.
Nigerian/Benin market is of 2 mts per annum where Thai and Indian parboiled rice sell at par in equal ratio; Entire Liberian market of 0.5mts needs Indian parboiled variety only; Ivory Coast has annual demand of 1.3 mts with 50% market share of Indian parboiled/ white rice. Senegal demands 1.2 mts annually 100% broken white silky Sortexed rice where Indian share is 60%--rest goes to Thai and Uruguay.
BANGLADESH—NEW KID ON THE BLOCK
This year Bangladesh needs to import 1.5mts of Non-Basmati rice-that could go up to 2mts. Import duty is reduced by Government of Bangladesh (GOB), to 10% from 28%--thus confirming desperation of demand. (GOB) has issued five tenders of 50000mt each where 0.1mts Indian 5%parboiled rice is contracted at $430 and $445 C&F while local wholesale price in Bangladesh is taka 45/kg or about $560/mt. GOB also bought 0.2 mts of Vietnamese parboiled rice at $470/mt C&F.
Indian private traders are daily making truck dispatches from West Bengal/ Bihar to Bangladesh and have dried up market surpluses in these two states. Additional demand will be catered from Jharkhand/ Chhattisgarh by land route or from Kakinada via sea. Price of 5% parboiled rice which was $400 C&F Chittagong in May 2017 is higher by 10% now. Indian values are under tremendous pressure due to demand pull from Bangladesh that will make rice expensive for African markets as well.
India’s farm produce is private; mills are private; traders are self-employed who arrange financing privately; market risk of profit and loss is private; buyers/importers too are largely private. Rice inflation is under control. The lesson is that the less the government the better the trade. Momentum of rice export can be maintained if Government avoids tinkering with current policy profile. Rice is the only agro-commodity that has weathered test of time in national and international markets.