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Due to India’s restrictions on rice exports, trade in Asia has been paralysed as buyers seek alternatives in nations like Vietnam, Thailand, and Myanmar, while sellers are postponing deals due to increased prices, according to industry officials. After below-average monsoon rains made seeding difficult, India, the primary crop exporter, moved to improve supply and stabilise prices by barring rice exports and levying a 20% fee on other types.
Key takeaways
- India’s rice growing is impacted by a poor monsoon in crucial states.
- Exports of non-basmati white rice would be subject to a 20% tariff.
- Customers may switch to competing suppliers in Thailand or Vietnam.
- Given that India owns 40% of the global market, rice prices will rise.
- From September 9th, India forbids the use of 100% broken rice.
India's Rice Export Curbs, Paralyse Asia Trade
India, the largest exporter of rice in the world, tried to increase supply and stabilise prices on Thursday after below-average monsoon rains hampered sowing by banning imports of rice and imposing a 20% levy on several other varieties. In fact, the export of rice is just the most recent in a lengthy list of goods that have been outlawed this year in an effort by politicians to increase supply and drive down prices despite trade barriers brought on by the Ukrainian conflict. Since India’s decision, the price of rice in Asia has increased by 5%, and this week prices are predicted to climb, even more, deterring buyers and dealers. There is no rice trading in Asia, according to Himanshu Agarwal, executive director at Satyam Balajee, India’s biggest grain exporter, since traders don’t want to make snap decisions.
And India accounts for approximately 40% of all shipments worldwide. He concluded that no one could thus forecast how so many prices would rise in the upcoming months. Additionally, more than 3 billion people rely on rice as their primary source of nutrition, and after India banned export in 2007, the cost of a tonne of grain rice shot up to everyone’s highs of about $1,000.
India sold a historic 21.5 million metric tonnes of rice in 2021, surpassing the combined exports of the US, Pakistan, Thailand, and Vietnam.
Due to the customer’s refusal to pay the government’s 20% export fee in addition to the agreed contract price, about one million tonnes of rice are stuck at Indian ports.
Loadings Halted
The loading of rice has stopped at Indian ports, trapping an additional one million tonnes of grain there because buyers are refusing to pay the government’s 20% export tax in addition to the agreed-upon contract price. Nitin Gupta, vice president of Olam India’s rice division, claims that shippers are now organising unfulfilled contracts even though some clients are willing to pay more for new contracts.
Indian exporters are no longer accepting new contracts, therefore customers are looking to competing nations like Thailand, Vietnam, and Myanmar for supplies. Dealers claim that these countries raised the cost of 5% broken white rice by about $20 per tonne during the previous four days. But some suppliers are also postponing contract signing because they anticipate a price hike.
“We anticipate costs to climb higher in the coming weeks,” a Ho Chi Minh City businessman said.” The cost of Vietnam’s 5% broken rice jumped to $410 per tonne on Monday from $390 to $393 per tonne the previous week, according to traders. China, the Philippines, Bangladesh, and many African countries, including Senegal, Benin, Nigeria, and Ghana, are the top importers of ordinary-grade rice. Premium grade basmati rice is purchased by Saudi Arabia, Iran, and Iraq. Buyers are now afraid that India’s move may boost rice prices and make the food staple as expensive as wheat and corn, according to a Mumbai-based dealer with a global trading organisation.
What is the status of India's rice trade?
In 2011–12, India overtook Thailand as the top rice exporter in the world, taking over from it.
Non-basmati rice exports increased to 4 million tonnes in 2011–12 from roughly 100,000 tonnes in 2010–11.
In those two years, 2.3 & 3.2 million tonnes of basmati rice were exported, respectively.
Since then, non-basmati cultivars have been exported more and more, reaching 8.2 million tonnes in 2014–15.
After declining to 6.4 million tonnes the following year, the amount increased to 8.6 million in 2017–18.
The motivation to sell abroad instead of to the state or the local market was diminished by the ensuing rise in domestic pricing.
India saw significant benefits, with a substantial increase in non-basmati variety exports.
In recent years (2014–18), Vietnam’s export share has been between 13 and 16 per cent, Thailand’s between 22 & 25 per cent, and India’s between 25 and 26 per cent.
Indian rice is highly sought worldwide.
India primarily targets nations in the Middle East and Africa for its non-basmati rice exports. However, the significant importers of Indian basmati rice are the US & Europe. Singapore, Malaysia, Saudi Arabia, Australia, and other nations are substantial rice importers of our nation.
India is currently the second-largest exporter of rice in the world, despite fierce competition from other nations. To eliminate the complications and complexities of international commerce, the Indian government has established streamlined Export-Import Commerce rules. To increase exports, the government also reduced the price of rice on the global market.
The most significant exporter of rice worldwide is India. With 18.75 million metric tonnes, last year witnessed the most significant amount of rice exported from the country. The Indian government wants everyone to know that it controls most of the world’s rice production. India presently exports to more than 150 nations, and because of the persistent food shortages, it now has power.
