Govt extends deadline for exporting non-basmati rice

NEW DELHI: The government on Monday extended a deadline for exporting 55,000 tonnes of non-basmati rice to four African countries by three months, just a few days after the Commerce Ministry gave permission for export of 10 lakh tonnes (one million) of rice to 21 other African countries.

In a statement issued here by the Agriculture ministry said that State Trading Corp of India (STC) would export the rice to Nigeria, Senegal, Ghana and Cameroon by July 30. So far, the agency has only been able to export only a paltry 15,000 tones to Ghana at about $500 per tonne.

According to a Commerce ministry official, the extension was made in response to a request for extension by the STC since there were no fresh import deals of late. The move, however, endorses the reading within the sector that parastatals may prove unequal to the task of striking a deal that is advantageous to India despite the economics for rice export proving positive.

Indian rice, with its price pressured down on account of oversupply and the reluctance of the government to pick up anymore levy supplies, reportedly costs not more than Rs 17,000 or $340 a tonne at the port currently. Better-quality parboiled rice with just 16 per cent brokens can reportedly be sourced from Chhattisgarh for as low as Rs 11,500 a tonne, way below the Rs 14,500 rate payable to mills for levy rice.

And at a low rate of around Rs 11,500, the export cost at Kakinada is pegged by trade at slightly lower than $300. Compared with Thai or even Viet Namese rice (they are the world’s leading rice exporters, producing 70% of global volume) Indian rice is relatively economical. By the first week of May, the benchmark Thai rice price for export fell to $530 a tonne from s $540 due to thin demand, with the planned government stock sale adding to the downward pressure. Apprehensive that prices could plummet further, the Thai government announced last week that it could “revise” a plan to sell 3.76 million tonnes of rice from its stocks.

Last Wednesday, the government had allowed parastastals STC, MMTC and PEC to export one million tonne of non-Basmati (premium, aromatic, long grained rice variety) rice exports to 21 African nations. Curiously, while the exports are apparently on government-to-government account and to be routed through the parastatals, the actual sourcing and shipping are reportedly expected to be sub-contracted to private firms including the Delhi-based Shri Lal Mahal Ltd, Emmsons International and Amira Foods.

That has already set off apprehensions among commodity experts that the private sector may once again end up, cocking a snook at parastatals, raking in the big profits on the first significant steps to open up rice exports totally by doing away with the conditional ban imposed early last year.

A meeting of a committee of secretaries recently decided to open up wheat exports to the tune of two million tonnes to the private sector, a move meant to sponge up as much of the wheat glut in the plunging domestic market for sale outside the country.

In the case of rice, however, the government appears to be deliberately proceeding far more cautiously in completely lifting the blocks to export despite an estimated production of 98.89 million tonnes in the crop year to June.

According to the agriculture ministry, that would be higher by about 2.3 percent compared to last year. But rice stocks with the government have mounted to phenomenal highs, necessitating exports urgently although global rice prices have eased up since early this year based on improved global output prospects. On May 1, India's rice stock rose 66 percent on year to 21.4 million tonnes.

That notwithstanding, the government has been reluctant to make any bold decisions on rice exports in the throes of the general election and persistently high food prices, choosing instead to allow exports on a governmetn-to-governmetn basis to mainly African countries, ostensibly on “humanitarian” considerations. Unlike Western importers such as the EU and USA as well as W Asia, African nations have been big buyers of non Basmati rice varieties.

The imposition of MEP (minimum export price), aimed at preventing more popular non Basmati varieties of domestic consumption from flying out of the country in big quantities and consequently boosting rice prices in the country, hurt the African nations the most. Last year, the FAO urged the Indian government to take the lead in lifting the export bars and easing global rice prices.