With China emerging as an export giant and countries like Pakistan, Thailand and Vietnam dampening the market for Indian rice in Asia and Africa, countries like Egypt, China, Mexico, Malaysia, Indonesia and the Philippines could be the potential new markets for Indian rice exports, according to a latest market update by Cogoport, India’s homegrown online logistics marketplace. Before other countries extend their market share, there is merit in establishing trade relationships – the update says.
The market update also points out that global rice production is expected to see a decline, as smaller crops are expected in the United States, North Korea and Thailand. India is expected to see a drop in non-basmati rice exports from India in 2019 while Basmati rice exports from India is expected to grow but at a slower rate in 2019.
Nikhil Singh, CEO of Rajputana Rice, ships over 100 containers of rice every month to West Africa. He said, “Rice exports can be challenging. Exporters face liquidity issues as payment can take months to come and competition from high quality and cheaper Pakistani and Thai rice is increasing.”
Vishal Agrawal, CEO of Saya Overseas, who ships rice to the African and Gulf countries adds: “We used to ship 60-70 containers monthly. Now because of the challenges, we’re moving only about 40 to 50. The economy is slowing down and there is tough competition from other countries. Pakistan, Thailand and Vietnam are offering better rates. There are losses because of defaulters in this industry.”
There is also a growing concern over more and more manufacturers jumping on the export bandwagon. Agarwal said, “Competition among rice exporters is also increasing. Every other manufacturer is now becoming an exporter and while manufacturing exporters get the benefit of subvention scheme, mill exporters do not .”
In light of the challenging times for the rice industry ahead, Kunal Rathod, Co-founder and Head of Growth, Cogoport comments, “Indian exporters face stiffer competition now as China turns into a low-cost rice exporter while higher tariffs on non-basmati rice threaten India’s chances to export to Bangladesh. Indian rice exporters need to look for potential new markets such as Mexico which is relying less on supplies from the US.”
“Countries like Egypt where availability of affordable Asian rice can fill tight domestic supply gaps could also be potential new markets whereas countries like China, Malaysia, Indonesia and the Philippines continue to be major rice importers and can be targeted, ” he added.
Rakesh Kumar Singh, Vice President of The Rice Exporters Association and an industry veteran with 45 years of experience in the rice trade do have some advice for exporters in the industry. He said, “We remain a strong player in rice exports to West Africa. We should now be targeting new markets like China, Malaysia and the Philippines. To avoid payment challenges, exporters should take an advance of 10-20% and the balance on fax or through the bank. If you have some money upfront, the buyer will not default.”