Rice exports likely to decline 10% this year

After a bumpy ride last year, India’s rice exports are likely to decline by up to 10 per cent this year following fresh restrictions imposed by importing countries.

While Bangladesh has imposed a 28 per cent import duty on rice to restrict its exports largely from India, the European Union has made its quality norms stringent with the introduction of new pesticide limits. With this, rice (other than basmati) exports to Bangladesh and basmati rice shipment to the European Union are set to decline.

The restrictions from importing nations assume significance as Bangladesh accounts for over 18 per cent of India’s 8.5 million tonnes of rice (regular varieties) exports. The European Union constitutes nearly 10 per cent of India’s basmati rice exports annually. A part of this decline, however, is likely to offset with the start of direct export to China, of basmati and regular varieties, possibly in the second half of the current fiscal.

“Overall rice exports from India are set to decline this year due to stringent quality norms introduced by the European Union. In the immediate future, therefore, India may lose its entire export of 400,000 tonnes to the European Union markets. The scenario, however, would improve if growers reduce the use of pesticides in the harvest of basmati rice in the long term. Indian exporters would also lose the entire Bangladesh market in the immediate term,” said Gurnam Arora, joint managing director, Kohinoor Foods — one of India’s largest basmati rice exporters, which sells its aromatic rice under the Kohinoor brand.

Data compiled by the Agricultural and Processed Food Products Export Development Authority (Apeda) showed a bumpy ride for the export of basmati and other varieties in the last financial year. Last year, India emerged a large supplier of rice to the South East Asian (SEA) countries owing to a devastating flood in the region. Consequently, India’s rice exports (other-than-basmati) jumped by a staggering 28 per cent to 8.65 million tonnes for the financial year 2017-18, compared to 6.77 million tonnes in the previous financial year. India’s basmati rice exports, however, has been stagnated around 4 million tonnes for the past three years.

In value terms, however, rice exports (other than basmati) from India jumped by a whopping 41 per cent to $3564.39 million for FY17-18 against $2531.47 million in the previous financial year.

“A part of the decline in export of regular rice varieties would be compensated through shipment to China for which Apeda has started registering exporters,” said a senior official with a large rice exporting company.

A study from India Ratings and Research (Ind-Ra) states that India’s export price is likely to remain competitive in the international market and the recent decline in India’s rice export prices could attract buying from African countries as a decline in rupee is cushioning exporters’ margins.

Indian rice prices softened after exports declined in April 2018, following a reduction in the export of basmati rice to Saudi Arabia and other varieties to Bangladesh, along with a subdued demand from African countries. Ind-Ra observes that imports by Bangladesh are likely to fall further in 2018-2019, as its domestic output may rebound with a crop recovery and expansion in sown area. As a result, India’s exports could reduce by 0.5 million tonnes to 1 million tonnes.

In May 2017, Chinese authorities had identified 14 rice exporters from India to be considered for its shipment to China. But registration of interested exporters started recently. Meanwhile, according to the third advance estimates for 2017 - 2018, India is set to achieve a record production of 111.5 million tonnes against the target of 108.5 million tonnes this year.