With higher production and a strong dollar, rice expo-rters are expecting better profit margins this season. However, the benefits due to a fall in the rupee will be marginal, as many exporters had hedged positions when the rupee was around 48 to the dollar.
Exporters maintain profitability would be even better if the minimum export price (MEP) of basmati was lowered from the current $900 a tonne.
“It would help exporters move forward with contracts signed in October and November,” said Vijay Setia, president, Rice Exporters Association, who believes if the MEP was lowered, it could help basmati exports reach 2.5 million tonnes.
Credit rating agency, Crisil, in a recently published report, said the increasing share of India in the global rice trade and favourable exchange rates may boost export this year.
The report maintains that expectation of a bumper rice crop in India in 2011-12 (October 1-September 30), lifting of the ban on non-basmati rice exports and a weak production outlook for most rice-exporting countries may drive a sharp increase in India’s share in the global rice trade. Healthy export opportunities, low paddy prices and a favourable exchange rate would lead to improved profitability for rice millers in 2011-12.
Raghumit Sodhi, proprietor, GRD Group Trade and Investment, an exporter of basmati rice, said the rising dollar had given ‘windfall’ gain to exporters. He believes it would be temporary. Exporters say they expect profitability to increase but the growth may be in single digits.
