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Indian rice exporters in a fix as transport costs rise, demand from Gulf drops


Rice exporters, both basmati and non-basmati, are facing problems over rising transportation cost due to a hike in diesel price and a subdued demand in the Gulf region due to the second wave of coronavirus hitting the region. Basmati rice prices have fallen by 4-7% in last 10 days and exporters said transportation cost has increased by more than 20% to cart rice from Haryana to Mundra and Kandla ports.

The Gulfood 2021 held between February 21-25 in Dubai did not garner much business for Indian basmati exporters as people stayed away in fear of coronavirus. However, South American buyers such as Peru and Argentina have recently granted market access to the Indian basmati rice, which will help the basmati rice trade to boost exports and get better prices.

“We were expecting to make good business at Gulfood. But the occupancy at the exhibition was little less than 40 per cent. The fear of Covid had kept the buyers away,” said Gautam Miglani, owner of LRNK, a Haryana-based basmati rice exporter.

This resulted in prices of Pusa steam basmati rice falling to Rs 62 per kg from Rs 65 per kg and the parboiled basmati rice falling to Rs 53 per kg from Rs 56 per kg some days 10 days ago. On the other hand, transportation charges have increased from Rs 140 per quintal to Rs 175 per quintal.

For the April-December period of the current financial year, total rice exports grew 80 per cent to 11.59 million tonne from 6.42 million tonne in FY20. Of this, shipments of basmati rice has grown by 19 per cent at 3.38 million tonne from 2.84 million tonne in FY20, while that of non-basmati have seen a whopping increase of 129 per cent to 8.21 million tonne from 3.58 million tonne same period last fiscal.

BV Krishna Rao, president of the Rice Exporters Association, a body of non-basmati rice exporters, said India is expected to achieve 12 million tonnes of non-basmati rice exports in FY21. “There is a shortage of rice across the globe and therefore, export demand has gone up,” Rao said.

Rice exports, including basmati and non-basmati, are expected to be around 16 million and 17 million tonnes against 9.48 million tonne in FY20. “We are also hearing that the Philippines might reduce import duty on rice from 50 per cent to 35 per cent. If that happens, then it will open another destination for Indian rice exporters,” Rao added. He expects that in FY22, Indian non-basmati rice exports will surpass 12 million tonnes.

Bangladesh has emerged as one of the leading buyers of non-basmati rice. Indian rice exporters are exporting rice at $400-$420 per tonne when prices at other destinations such as Thailand and Vietnam are ruling at a high of $500 per tonne.

Suraj Agarwal, CEO of Tirupati Agri Trade that exports rice to Bangladesh said “The export price to Bangladesh is quite a comfortable one. However, we are feeling the pinch of rising diesel prices and the margins of exporters are getting squeezed by 2-4 per cent.”

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