Surge in rice export prices

Logistics challenges stand in the way of Indian rice exporters

Post By : Karvi Rana
Post Date : March 30, 2021
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Reading Time: 2 minutes

While new opportunities come knocking on the door for the Indian rice exporters, especially for non-basmati rice, the logistics hurdles keep exporters tied on taking up any new contracts.

“Logistics in rice exporters has emerged as the biggest challenge. It seems to be going out of control but we are trying our best to fulfill the contracts signed than chasing new deals,” said BV Krishna Rao, President, The Rice Exporters Association (TREA).

The exporters are currently witnessing an upward trend in the demand for Indian rice in the global market.

Last week, Union Minister of Commerce and Industry Piyush Goyal informed the Lok Sabha in a written reply that rice exports during April-January this fiscal were 9.46 million tonnes (mt) compared with 5.05 mt the whole of last fiscal. Exports have fetched $3,505.74 million this fiscal against $2,031.25 million the previous one.

The Indian rice in the global market is good and now holds an edge over its prime competitor Thailand on quality after the output gets affected this season as also the previous one.

Furthermore, a strong currency is also keeping the South-East Asia country’s rice costly which is bringing in more opportunities for India.

Currently, Thailand is offering its 5 percent broken rice at $505-510 (₹36,700-37,050), while Vietnam is offering the same grade at $500-505(₹36,300-36,700). India, on the other hand, is offering its 5 percent broken parboiled rice around $400 (INR 29,075) a tonne.

Apart from this, the Andhra Pradesh government’s decision to allow the use of Kakinada deep water port also gave a push to the rice export.

Although there is an increase in demand for Indian rice with countries like Vietnam, the Philippines, Sri Lanka, and Indonesia turning to India for supplies, the increased freight and container charges are holding back the exporters to fully leverage the coming opportunities.

Exporters who are using the Kakinada deep water port are also facing similar logistical challenges. As per reports, exporters are awaiting ships currently.

“At one point in time, we were waiting for the ship to berth at the Kakinada port. Now, the berth is available, but ships availability is a problem,” Krishna Rao said.

As a result, shipping charges have increased to $40 a tonne to Indonesia and Malaysia from $20 earlier, while for African destinations they have increased to $90 a tonne from $45.

“Those who have bought on a free-on-board basis are not bringing in the vessels, while those who have sold on cost and freight basis are paying higher charges,” the TREA president said.

During the current fiscal, India has been able to take advantage of record rice production and huge stocks in its warehouses to double its shipments.

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