Rice exports from India are set to swing in the last quarter of this year on a spate in orders after shipments slumped 14% in the last three quarters over high input costs and tepid demand from Bangladesh.
Chandigarh: Rice exports from India are set to swing in the last quarter of this year on a spate in orders after shipments slumped 14% in the last three quarters over high input costs and tepid demand from Bangladesh.
“Consignments in January are better than the previous year and the trade is likely to attain levels close to the previous year,” a senior commerce and industry ministry official told ET.
Exporters have seen a surge in demand from the United Arab Emirates, Iran, Saudi Arabia and the US this quarter. The official said the supply for exports has streamlined after being affected for the last few months of 2018 because of assembly polls in some states. A bumper yield in Bangladesh also took toll on Indian exports, he said.
The 5% subsidy on export value extended to non-basmati rice under the Merchandise Exports from India Scheme (MEIS) in November helped in recovery of trade, but margins remained thin, exporters said.
“Raw material (paddy) prices are still high as most farmers are inclined to sell to the state agencies in states, including Chhattisgarh,” said P Baskara Reddy, promoter of Kakinada-based Sri Chitra Agri Exports. He said the exporters hope that the scheme will be extended beyond March 26 and the incentive doubled to 10% under MEIS to complement the shrinking margins.
The announcement of higher price assistance by political parties just ahead of the harvesting season in the run-up to the assembly polls had spiked government procurement and dampened private purchase in states like Chhattisgarh where the procurement price was higher by 60%.
The non-basmati rice exports that are dependent largely on varieties grown in Chhattisgarh were affected as paddy supply dried up following announcement of higher than minimum support price (MSP).
Exporters are wary of such politically motivated price assistance. “Higher procurement price will subdue trade in the coming years. Direct financial assistance is a better route to support farmers,” Rice Exporters’ Association president BV Krishan Rao said. Higher procurement would lead to a surplus buffer stock and a situation where the government will have to auction its stocks at a loss, he said.
“Similar situation took place in 1999-2000 when Food Corporation of India had to release its brimming stocks at a discount after higher MSP had boosted federal procurement three-times over the buffer stock norms,” Rao said.
The rice procurement crossed 41 lakh tonnes so far compared to 32.5 lakh tonnes in Chhattisgarh in the last Kharif marketing season. “We have not taken export commitments this season as farmers are keen to sell to government agencies,” a senior executive of Uttar Pradesh-based Laxmi Rice Mills said.
While export of basmati rice has increased till December, non-basmati exports stayed downhill with 5.6 million tonnes of shipment till December as against 6.3 MT a year ago.
“Consignments in January are better than the previous year and the trade is likely to attain levels close to the previous year,” a senior commerce and industry ministry official told ET.
Exporters have seen a surge in demand from the United Arab Emirates, Iran, Saudi Arabia and the US this quarter. The official said the supply for exports has streamlined after being affected for the last few months of 2018 because of assembly polls in some states. A bumper yield in Bangladesh also took toll on Indian exports, he said.
The 5% subsidy on export value extended to non-basmati rice under the Merchandise Exports from India Scheme (MEIS) in November helped in recovery of trade, but margins remained thin, exporters said.
“Raw material (paddy) prices are still high as most farmers are inclined to sell to the state agencies in states, including Chhattisgarh,” said P Baskara Reddy, promoter of Kakinada-based Sri Chitra Agri Exports. He said the exporters hope that the scheme will be extended beyond March 26 and the incentive doubled to 10% under MEIS to complement the shrinking margins.
The announcement of higher price assistance by political parties just ahead of the harvesting season in the run-up to the assembly polls had spiked government procurement and dampened private purchase in states like Chhattisgarh where the procurement price was higher by 60%.
The non-basmati rice exports that are dependent largely on varieties grown in Chhattisgarh were affected as paddy supply dried up following announcement of higher than minimum support price (MSP).
Exporters are wary of such politically motivated price assistance. “Higher procurement price will subdue trade in the coming years. Direct financial assistance is a better route to support farmers,” Rice Exporters’ Association president BV Krishan Rao said. Higher procurement would lead to a surplus buffer stock and a situation where the government will have to auction its stocks at a loss, he said.
“Similar situation took place in 1999-2000 when Food Corporation of India had to release its brimming stocks at a discount after higher MSP had boosted federal procurement three-times over the buffer stock norms,” Rao said.
The rice procurement crossed 41 lakh tonnes so far compared to 32.5 lakh tonnes in Chhattisgarh in the last Kharif marketing season. “We have not taken export commitments this season as farmers are keen to sell to government agencies,” a senior executive of Uttar Pradesh-based Laxmi Rice Mills said.
While export of basmati rice has increased till December, non-basmati exports stayed downhill with 5.6 million tonnes of shipment till December as against 6.3 MT a year ago.