India, a leading exporter of rice before a slew of domestic curbs came in the way, returned with a bang in the global markets in 2011-12, toppling traditional leaders like Vietnam and Thailand to emerge as the biggest exporter.
However, sustaining this performance might be difficult. For, exporters have started raising prices. Last year, they had huge stocks because of a ban imposed on non-basmati rice since 2007. Even then, India will continue to be a big player in global rice markets, albeit not as big as it was in 2011-12, say those in the trade.
According to sector officials, aided by a much-awaited decision to open export of non-basmati rice in September 2011 (a ban was imposed in 2007 to ease domestic supply), India managed to export more rice in six-seven months than Vietnam and Thailand could do in all of 2011-12.
India’s total rice export in 2011-12 is expected to be 6.5-7 million tonnes (mt), which is around seven per cent of the country’s total production. Vietnam and Thailand, too, exported 6-6.5 mt. The United States Department of Agriculture pegged export from India at seven mt in the year.
Vietnam exported some 1.5 mt during October 2011 to January 2012, while India recorded 2.7 mt during the period. Between April 2011 and January 2012, India’s rice exports were worth $3.78 billion, against $1.96 billion during the same period the year before.
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Of the total rice exported by India, around 4.5 mt was non-basmati rice and 2.5 mt was basmati.
Pricing, markets
“Indian rice is priced less than Vietnam, which has propelled it to capture traditional markets like Africa,” said Ashok Gulati, chairman of the Commission for Agriculture Costs and Prices.
He said when India began exporting in September, Vietna-mese rice was priced higher than that of India. As India started dropping its rates, Vietnam had to follow to stay in competition. Vijay Sethia, member of the All India Rice Exporters Association, said Indian rice was priced at $360-450 a tonne (FOB), while that of Vietnam was priced at $450-550 and Thailand at $575 a tonne. Pakistan sold at $480 a tonne.
Vietnam was the undisputed leader of the world rice market, exporting eight to 10 mt yearly. It had to undercut after India entered the market in September-October, offering prices almost $100-150 per tonne less than the Southeast Asian nation. Thailand was also priced out of contention as its output dropped because of floods and a high floor price that made its rice costly.
“Basmati rice export was not a problem, as it had its set buyers in West Asia and elsewhere, but it was non-basmati rice which changed the game in favour of India,” another major exporter said.
“Some credit should also be given to Indian exporters, who adopted modern techniques to process rice and scouted for newer markets,” said Prem Garg, managing director of Sri Lal Mahal group and a leading rice exporter. He said Africa, particularly Nigeria, was one such market which Indian exporters managed to capture because of the quality of rice and the price differential.
“Africa is largely a parboiled rice consuming region. We sold our parboiled rice at $400-500 per tonne, while Thailand could sell only at $580-650 per tonne,” Garg said, adding Indian rice was also of a much superior quality.
Momentum challenge
However, there already were signs in April of the pace slackening. “It will be a big challenge to maintain the pace of export in 2012-13, as Nigeria is not expected to purchase at the same level as in 2011-2012,” Garg said.
He said total rice exports (basmati and non-basmati) in 2012-13 could drop to around four to five mt, 29 per cent less than last year, as Indian exporters are slowly raising prices. “Most exporters till last year were liquidating stocks accumulated during the ban period, which allowed them to sell at lower rates. However, it is not the case this year, which could nullify the cost advantage that India enjoyed vis-à-vis Vietnam and Thailand,” Garg said.
However, with a bumper harvest in excess of 100 mt in 2011-12 and record stocks of a little over 34 mt in state-run warehouses, India will continue to remain a major player in the global market till at least June 2013, even if on a lower scale than 2011-12.
“We should focus more on exporting value-added rice like rice with just five per cent broken content, or else we will lose our advantage,” Sethia said.