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India may see a decline in its rice exports in 2018-19, the first time in three years, due to a 13 percent hike in minimum support price (MSP) for paddy and a low demand in various major markets including Bangladesh.
The decline is in volume terms but trade sources told The Financial Express that there may be a flat growth in exports.
Exports for basmati rice, varieties of which account for 60 percent of overall rice exports, fell 18 percent in October. Price of non-basmati rice dropped in key export markets and so, traders decreased shipments.
Last fiscal, exports were booming. They touched a record 1.271 crore tonne in 2017-18, up from 10.76 million tonne in the year before. In the April-September period this year, India’s exports were only 5.8 million tonne.
Bangladesh was an important market for India in the previous fiscal for non-basmati rice, BV Krishna Rao, President of Rice Exporters Association, told the paper. "Production this year is higher there, so the country may not import much whenever it opens the import window," he added.
A higher MSP can dampen the competitiveness of Indian exports in the global markets.
Non-basmati shipments dropped 13 percent in April-September this year to 37.23 lakh tonne, while basmati rice exports fell 2.4 percent to 20.82 lakh tonne.
However, basmati exports were higher in value by 6 percent while the non-basmati rice was down 12 percent in value terms.
Exporters delayed the signing of contracts for non-basmati rice for four months till October to get higher prices when the revised MSP kicked in, the report said. Basmati export contracts were down to 2.05 lakh tonne in October from last year's 2.51 lakh tonne.
In July, the Centre hiked the MSP for paddy to Rs 1,750 per quintal, the biggest hike in six years. This was done to get farmers at least 50 percent profit over the cost of crops for which MSPs are fixed.
There is hope for recovery in the second half of the fiscal if China buys in significant quantities in December, according to sources.
"The exports of basmati may recover during the second half. Iran has not yet started issuing import permits. Once the process is resumed, we can have an idea of how much it requires. India has the rupee arrangement with Iran and that is going to help them to buy from us," Vijay Setia, president of the All-India Rice Exporters' Association, was quoted as saying in the report.
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