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M.R. Subramani

Chennai, April 19

India is the third largest exporter of rice despite a ban imposed in April last year. However, if one were to go by projections by the US Department of Agriculture, then Pakistan could overtake India to be the third largest rice exporter this year.

Last year, the Centre banned exports of rice as its prices began to surge in the domestic market. Despite the ban, rice prices are ruling high though traders say they could begin to taper off next month, especially after the elections.

One of the reasons for India to be the third largest exporter, after Thailand and Vietnam, is that it had to export rice to the neighbouring Bangladesh and African countries on humanitarian grounds.

In fact, India entered into a bilateral agreement with Bangladesh after it was badly affected by cyclone last year to provide five lakh tonnes of rice.

According to the Food and Agricultural Organisation, the exports last year were on government-to-government transactions of non-basmati rice.

In fact, in view of India’s absence in the global market, Thailand and Vietnam gained. During 2007-08 (July-June), Thailand shipped 10.1 million tonnes (mt) against 9.5 mt a year ago, while Vietnam exported 4.64 mt against 4.42 mt.

This season, Vietnam is expected to ship 5.2 mt, while Thailand’s exports are likely to decline to 9 mt.

The USDA, in its grain markets report, however, sees India’s exports dwindling to 2.5 mt against 3.3 mt last year. Pakistan, on the other hand, is seen improving its exports to 4 mt from 3 mt.

However, the FAO sees exports rising to 4 mt this calendar year against 3.7 mt a year ago, thus maintaining its third position.

“Despite rising stocks, India’s exports are falling. India has imposed restrictions on its rice exports to ensure market supplies and dampen rising domestic prices. On the one hand, that decision ensures adequate domestic supplies, with the intention of dampening internal prices. But, on the other, the export restrictions hurt exporters and low prices hurt producers because low prices tend to be a disincentive to production. Hence, India’s policy is short-sighted and may sacrifice the long-term goal to be self-sufficient,” said the USDA report.

“The irony is that despite these restrictions, domestic prices are not coming down,” it observed, adding: “Reportedly, procured supplies will not be released onto the domestic or global markets until after the national elections. Since India is the third largest exporter, the release of additional supplies might dampen prices (in the global market).”

According to the USDA, rice production in the country is likely to be increased to a record 98.9 mt against 96.9 mt last year. The FAO has put the output at 97.3 mt.

Consumption of rice is projected at 92.4 mt, while ending or carryover stocks are seen at 17 mt, up 4 mt over last year.

It is these ending stocks that are seen as pointers of the Centre allowing exports after elections.

Since October, the Centre has procured 26.47 mt of rice against 21.97 mt during the same period a year ago. Rice stocks are currently over 20 mt against the buffer norm of 12.2 mt.

More Stories on : Rice | Exports & Imports

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