Interview – India’s rice exports outlook positive on basmati and GI branding

rice-syngenta.jpg

As in case of most commodities, Indian rice exports are facing tough challenges too. Yet, the outlook remains positive with increase in Basmati production and the GI registration for the premium rice, said Mohinder Pal Jindal, president of All India Rice Exporters Association (AIREA) in an interview to Indo-Asian Commodities.

In 2012, India overtook Thailand with 10.23 million tonnes rice exports. What is the outlook this year given that domestic production is expected to dip due to impact of poor rainfall?

DSC_2037 (1)The outlook remains positive. Till 31 January 2016, we have exported 8.5 million tonnes, we hope to cross 10 million tonnes to exceed and remain ahead of Thailand.

The latest Directorate General of Commercial Intelligence & Statistics (DGCIS) data till January 31 shows that of the total Basmati exports were 3.4 million tones.

This year the production of non-Basmati rice production has come down by 2.5 percent, but there is adequate carry forward stocks so both domestic supplies and exports are not expected to be affected. In the case of Basmati, the production remains high, as new areas have come under Basmati cultivation.

While exports are not impacted, the realisation for Basmati has come down from Rs. 27,600 crore to Rs. 19,400 crore this year. In the case of non-Basmati also there is a drop in realisation from Rs. 19,000 crore to Rs. 12,300 crore as the international prices are down, while cost of production has risen and there are no new markets.

For Basmati, the Gulf countries remain the main market. There is an increase in EU market for Basmati. For non-Basmati, the main market is Africa. Due to the season change, the production of non-Basmati has been lower by 2.5 percent, but due to the adequate carry forward stock there won’t be much of an impact on the domestic stocks or for exports.

A recent Rabobank report has warned that India’s rice exports will fall by 50 percent by 2020, given the stagnant growth in production and the rising domestic consumption. What is your view?

 We don’t agree with the observation, our data gives a different picture. The area under Basmati cultivation has gone up from 1.6 million hectares in 2013 to 2.1 million hectares in 2014.   The production has also risen from 6.6 million tones in 2013 to 8.7 million tones in 2014 though it has come down in 2015 to 8.07 million tones due to bad weather conditions.

Currently, there is over production and hence prices are less and the demand is stagnant. Rice exports accounts for a very small share of our overall rice production.

Are government policies conducive to growth in rice production and exports?

 The government policy is not working in the interest of exporters. The low rate of interest that we as exporters should get versus what we get is different. World over the commodity exporters are charged a lower interest rate to push exports unlike India where interest rates remain high. Furthermore Interest subvention has been denied to the rice Industry.

Does the government policy put a cap on exports for each year?

Our estimates are that the production and export will increase in the coming years as our Basmati production is increasing. I am hopeful that our rice exports will scale over 10 million tonnes and not fall below.

What are these new varieties or areas?

There are new Pusa varieties like Pusa Basmati 1509 that came under cultivation around five years back and is being extensively grown in many parts of the country. The new improved varieties of Pusa Basmati seeds have significantly increased production.

How will the recent GI (geographical indication) registration of Basmati rice work to India’s export advantage? What are the plans afoot to capitalize on Indian Basmati in the overseas market given the challenges from Pakistan?

We will get a lot of benefit from GI issued to Basmati grown in the Indo-Gangetic plains on the foothills of the Himalayas covering Punjab, Haryana, Himachal Pradesh, Delhi, Uttarakhand, Western Uttar Pradesh and two districts of Jammu and Kathua,

During pre partition, part of Punjab now in Pakistan was in this region. As the area under Basmati cultivation spreads to states like Rajasthan and Madhya Pradesh there was need to distinguish and retain the premium quality of Basmati – long grained and aromatic rice in the traditional areas as against what is grown elsewhere.

The GI implementation will help retain the demand for premium Basmati which otherwise faced the threat of losing out due to increasing areas coming under Basmati cultivation. The products of these areas lack the aroma of Basmati grown in the GI areas. Further this will give us the basis to quash claims made by other countries that are misusing the name Basmati such as Texmati etc.

In terms of global prices, what is the outlook and how are Indian rice exports placed?

Where India is concerned a lot has to do with crude oil prices, as our major exports are to the Arab countries. When oil prices are high and these countries have surplus money, they spend more. When oil prices are down, as is the case now, and they have less money, they buy less and hence the market price stays low. This also reduces the demand. Currently not only are the prices lower, the demand too is dipping in the Middle East.

Last year it was $1000/ tonne, right now it is $800, a drop of $200 or 20 per cent. The millers are facing losses. Just like in the global market, the prices in the domestic market too have fallen 30-35 per cent. Fortunately, in the festive season the demand picked up and the paddy rates were alright so there were more sales. But since then the prices have dipped.

Petroleum Minister Dharmendra Pradhan recently disclosed that the government is in talks with countries in the Gulf, particularly the UAE about the possibility of creating a strategic storage for cereals in the Middle East under a swap arrangement for crude oil. How do you view this development, if it materialises?

 Talks on this have not really been started. It’s still a nascent plan. This plan seems far-fetched. If it translates into action, then it would be a positive move for those countries as also for India. In any case many exporters use the UAE as a transshipment hub to the West and to African countries.

 

 

 

Leave a Reply

Your email address will not be published.