Rice exporters pay for notification delay

The industry has to pay around Rs 8 lakh per vessel daily as demurrage charges for rice stuck at ports.

The Union Cabinet's decision to lift the ban on export of non-basmati rice contracted at $425 per tonne and above has not been notified. The delay, the industry says, is hurting exporters.

The Cabinet decision to partially lift the ban, imposed on October 9, was taken on Thursday. The delay is due to the "minutes of the Cabinet meeting" not having been finalised till late Saturday.

Government sources said the minutes would be made available early next week. This will allow the Directorate General of Foreign Trade to issue the order.

However, in the meantime, the industry is losing dearly. "The industry is losing $20,000 (Rs 8 lakh) per vessel daily as demurrage charges. Added to this, are warehousing expenses of Rs 10 lakh daily for an estimated 300,000 tonnes of rice in port godowns," said Prem Garg, vice-chairman of the All India Rice Exporters Association, and managing director of Shree Lal Mahal Group, the exporter of basmati and non-basmati rice.

His company's 47,000 tonnes of rice is lying in ships and another 100,000 tonnes in warehouses. At the Kakinada port in Andhra Pradesh, around 20 vessels loaded with rice for export are held up for 15-16 days, leading to a daily demurrage charge of $400,000 (Rs 1.6 crore).

In all, around 600,000 tonnes of rice contracted for export is lying in ships and port warehouses. But there is a catch.

Even when the decision to allow exports contracted at and above $425 per tonne gets notified, not a single grain from this 600,000 tonnes can be shipped since this lot has been contracted at $300-310 per tonne, Garg says.

However, the industry is hopeful the government will further relax the price threshold.

The October 9 ban, aimed at augmenting domestic stocks, had to be reviewed after exporters and governments of rice-producing states like Haryana and Andhra Pradesh opposed it.

An industry source criticised the ban as a knee-jerk reaction to rising rice prices. "In no way could the ban have helped the ongoing rice procurement, since the grades of rice procured by government agencies are not exported," he said.