Non-basmati rice exports surge in FY21 due to global demand, savvy pricing

India responded quickly to opportunities thrown up by the pandemic, and the hiccups faced by competing nations to put up a sterling performance in non-basmati shipments abroad

Amid the gloom surrounding the India economy due to the second Covid-19 wave, one area that has done commendably well in the farm sector is the export of non-basmati rice.

While basmati exports have traditionally been India’s forte, of late the non-basmati varieties have also picked up and financial year 2020-21 has been a stellar one for them.

Data sourced from the department of commerce shows that in FY21, non-basmati rice exports totaled around $4800 million, up 136.11 per cent over the same period last year.

In comparison, basmati rice exports during the same period totaled around $4,018.65 million, or 8.08 per cent lower than the year-ago period.

Overall, agriculture and allied activity exports in FY21 stood at $32,445 million, a year-on-year increase of 24 per cent. They made up 11.16 per cent of India’s total exports in FY21, only behind chemicals and related products.

However, within this category, the value of marine products and plantation crops such as tea and coffee shipped abroad shrank 11.30 per cent and 6 per cent respectively as global demand due to Covid-19.

What worked for India

Experts said one big reason for the surge in non-basmati exports is that India could offer these rice varieties at competitive prices to the global market amid the spread of Covid-19.

Trade sources said another driver was the demand from African and Asian countries during Covid-19 pandemic. Many of them were creating grain stocks to be used during emergencies.

Another factor that helped India’s non-basmati rice exports was the drought last year in Thailand, the world's largest rice exporter after India, which impacted the output.

Vietnam, the third-biggest exporter, has had to deal with low water levels in the Mekong River Delta, the country's main rice growing region.

The per-unit realisation also improved as Indian non-basmati was priced cheaper than global peers.

At the domestic level, agencies such as APEDA and the ministry of commerce made the most of the favourable situation.

As APEDA Chairman Madhaiyaan Angamuthu puts it, the spike in rice exports especially at a time when the Covid-19 pandemic disrupted supply in many commodities, has been attributed to the prompt measures taken by the government to move rice shipments while taking all the Covid-19 related safety precautions.

“We took a series of measures on the safety and hygiene front because of the operational and health challenges posed by Covid-19, while ensuring that rice exports continue uninterrupted. In collaboration with trade and port authorities, we commenced exports from deep water ports such as Kakinada and Paradip,” Angamuthu told Business Standard.

Innovative ways to smoothen logistical hurdles

APEDA along with other agencies involved also tried innovative ways to smoothen the logistical hurdles that bog exports, to ensure Indian exporters cash on the unique opportunity offered.

For example, for the first time, a consignment of rice exports was sent from Paradip port in Odisha, marking a major achievement in smoothening logistical bottlenecks in farm exports.

The consignment of one of APEDA’s member exporters, Sarala Food, was shipped to Hai Phong port in Vietnam.

This is the first time in the history of Paradip Port that non-basmati rice was exported.

Sarala foods group will ship 20 containers of rice followed by around 500 containers over the next three months from PICT to Vietnam.

Non-basmati rice exports to African and Asian countries are undertaken from various ports such as Kakinada, Visakhapatnam, Chennai, Mundra and Krishnapatnam. Paradip will soon emerge as one of the major rice-exporting ports in the country, Angamuthu, Chairman, APEDA said.

More needs to be done

In 2018-19, the Central government unveiled an ambitious policy that seeks to double farm  exports to $60 billion by 2022 and do away with arbitrary curbs on exports.

Aiming to push India into the list of the top 10 farm produce exporting nations, the policy has been backed by the Prime Minister’s Office.

Then Commerce and Industry Minister Suresh Prabhu, while releasing the policy, had said it ties in logistics support, a better trade regime, and state-led product development to connect farmers to global markets.

“Each state will have a designated department for promotion of agricultural exports, apart from cluster-based development for specific commodities. We have also identified several sea ports to serve as gateways for specific agri exports,” Prabhu had said.

Despite the fact that India occupies pole position in the global trade of these products, its total agri export basket still accounts for only a little over 2 per cent of world agri trade, estimated at a massive $1.37 trillion.

The policy mandated that the government finalise a list of essential agro-commodities.

All commodities will see restrictions such as minimum export price, export duty or bans revoked.

The government had estimated a total outlay of Rs 14 billion for agricultural exports. This would be done by merging myriad groups of agricultural export schemes and incentives.

More recently, a high-powered panel of experts said that with specific reference to rice exports, the Centre needs to ensure that a higher pool of surplus rice is available to exporters by suitably modifying Food Corporation of India (FCI)'s procurement strategies.

The panel was constituted by the 15th Finance Commission (FFC) to suggest measurable performance incentives for States to encourage agriculture exports and promote crops that can help in high import substitution.

It consisted of senior representatives from industry, academicians and former bureaucrats.

The panel said FCI is the largest buyer of rice in the domestic market for Public Distribution System (PDS) and lifts approx 40 million tonnes a year.

And, with the Minimum Support Price (MSP) increasing year after year, it is leading to smaller export surplus and uncompetitive pricing in the international market for Indian non-basmati rice.

This is perhaps why, despite being the world’s second-largest producer of rice, India's production and exports have both been stagnant over the years.

The panel seemed to suggest that excess FCI buying and increasing MSP’s are the major pain points for Indian rice exports, and could be addressed through suitable government policies such as price deficiency payment method (Bhawantar Scheme).

Rice is among the biggest agricultural exports from India along with buffalo meat and cotton. It was India’s single largest commodity with $7.3 billion trade surplus, followed by shrimp ($4.6 billion) and bovine meat ($3.6 billion), the panel said.

Rice production in India is estimated to be over 115 million metric tonnes (including 6-7 million tonnes of basmati).

The panel has identified crop value chains along with 21 others out of a laundry list of over 340 agriculture and commodities products that needs to be developed to enable India increase its agriculture exports from the current $40 billion to over $70 billion in the next few years.

This push will enable an estimated investment of around $8-10 billion in inputs, infrastructure, processing and other demand enablers which will in turn create an estimated 7-10 million additional jobs. Such a boost to exports will also lead to higher farm productivity and farmer incomes.

The other items identified by the panel for value chain development includes shrimp, buffalo meat, raw cotton, grapes, pulses, mangoes, banana, potatoes, honey etc.

The panel also advised creation of a state-led export plan with the private sector playing an anchor role and the Centre acting as an enabler.

Table: Rice and overall farm exports in FY21 ($ million)

Items	Apr-March 2020	Apri-March 2021	% growth
Rice (non-basmati)	2,031.25	4,796.02	+136.11
Rice (basmati)	4,372.00	4,018.65	-8.08
Total Agri	26,219.11	32,444.49	+24
Plantation Crops	1,587.10	1,492.48	-6
Marine products	6,722.07	5,962.43	-11.30

Source: Ministry of Commerce