India's southern state of Andhra Pradesh will use a deepwater port to export rice for the first time in decades amid a global shortage of the grain, according to a government order seen by Reuters, which could raise shipments this year by a fifth.
The order, issued late on Wednesday, allows Kakinada Deep Water Port to handle rice until more capacity is created at the adjoining Anchorage Port.
Congestion at the Kakinada Anchorage Port, India's biggest rice-handling facility, had led to a waiting period of up to four weeks compared with the normal wait of about a week, raising costs for shippers and limiting exports, said B.V. Krishna Rao, president of the Rice Exporters Association of India.
The government blamed the congestion on a surge in demand, driven by production shortfalls in other rice-producing countries.
Thailand and Vietnam are the other big suppliers, but their production has fallen in recent months because of excessive rains or drought, sending their prices to multi-year highs.
More shipments from the world's biggest rice exporter could cool global prices.
The move means monthly exports from Andhra Pradesh alone will double to 650,000 tonnes, Rao said, adding that rice shipping would begin in the deepwater port within days.
India's rice exports this year could rise to a record 16 million to 17 million tonnes from last year's 14.2 million, Rao said.
The government also thinks rice exports, excluding the premium basmati variety, could rise by 2 million to 3 million tonnes this year, said Pawan Agarwal, special secretary, logistics, at the federal Ministry of Commerce and Industry.
"We are also investing to expand capacity at the old Anchorage Port," Agarwal told Reuters.
The South Asian country has a massive surplus for export and prices are competitive, but some international buyers switched to Thailand and Vietnam because of the shipping delays, said a Mumbai-based dealer with a global trading firm, who declined to be identified because of the sensitivity of the matter.
India's 5 percent broken parboiled variety is being offered at $402-$408 per tonne this week, significantly lower than Vietnam's $510-$515 and Thailand's rate of more than $540.
India mainly exports non-basmati rice to Bangladesh, Nepal, Benin and Senegal, and basmati rice to Iran, Saudi Arabia and Iraq.
"In the next few weeks India can start fulfilling orders promptly," the Mumbai dealer said. "In that situation Thailand and Vietnam will have no choice but to cut prices to retain existing buyers."