Mint Explainer: How export curbs have impacted rice trade

livemint.com:

₹89,532 crore, amounting to over 22 million tonne. Preliminary figures indicate that from 25 August to 20 September, basmati rice exports dropped 30% year-on-year, and parboiled rice sales plummeted a steep 83%. Official data for the period is yet to be released.

Meanwhile, as a direct consequence of these export restraints, global rice prices were up 35% year-on-year as of 29 September, according to the International Grains Council. Mint spoke to several rice traders and exporters and they are hopeful that the 20% export duty on parboiled rice may be revised lower or abolished after 15 October, once the Kharif harvest hits the markets. According to traders of basmati rice, the government has indicated that the MEP will be revised lower to $850 per tonne, very soon.

With these decisions pending, tradeers and global buyers have adopted a cautious stance, expecting price to decline once duties and MEP are reduced. For now, some of the parboiled rice have been redirected locally which has led to a drop in prices within India, from ₹38 per kg (before 25 August) to ₹31 per kg now. Traders also said that deals may resume after 15 October, even if export restrictions are not eased.

For now, any trade deal comes loaded with price risks. But easing of exports curbs depends on the size of the upcoming harvest. Market arrivals in October and the quantity which the Food Corp.

of India is able to directly procure from farmers, at minimum support price or MSP, will provide cues on the size of the crop. Some analysts have flagged concerns that following uneven monsoon rains, India's rice production may be hit. Traders said that if export curbs are not eased India may lose market share to neighbouring Pakistan.