Mumbai: India’s rice exports are likely to fall to their lowest level in seven years, industry officials say, as weak demand from African countries weighs and shippers absorb the absence of government incentives that supported previous sales.
Lower shipments from India will help rivals such as Vietnam and Myanmar in raising their exports, according to Indian exporters, but could also force Prime Minister Narendra Modi’s government to increase buying from farmers, even as it struggles to liquidate last year’s stocks.
“Inventories have been piled up in Africa,” said Nitin Gupta, vice president for Olam India’s rice business. “A lot of Indian demand has been diverted to Myanmar and China as Indian prices are out of parity.”
India exported 11.95 million tonnes of rice in 2018/19 through March 31, down 7.2% from the previous 12 months, even though the country provided incentives for exports of non-basmati rice for four months.
The country exports non-basmati rice to mainly Bangladesh, Nepal, Benin and Senegal, and premier basmati rice to Iran, Saudi Arabia and Iraq. In basmati rice exports, India competes with Pakistan, while in non-basmati rice exports rivals are Thailand, Vietnam and Myanmar.
The government incentives for exports were temporary and discontinued March 25, said B V Krishna Rao, president of the Rice Exporters Association (REA). “The incentive needs to be restored quickly,” he said, “otherwise there could be huge drop in the exports this year.”
India’s rice exports in April-May fell 30% from a year ago to 1.58 million tonnes as shipments of non-basmati rice fell more than 50% to 711,837 tonnes, according to data compiled by Agricultural and Processed Food Products Export Development Authority.
Shipments of white rice from India have nearly stopped altogether as Vietnam and Myanmar are offering more than $30 per tonne discount over Indian prices, said Gupta.
Paddy buying by central and state governments has lifted prices in the open market, making it difficult for exporters to compete profitably in the world market, said Agarwal.
Indian exporters said the aggressive liquidation of old stocks by China, the world’s biggest rice producer, has also hit Indian exports.