India’s rice exports seen falling as government raises buying price

India’s rice exports are likely to decline from October this year as the government has increased guaranteed prices that farmers receive for much of their crop, making new season cargoes expensive compared to supply from rival growers.

Lower exports would mean that India will lose market share in key Asian and African markets, traders and industry sources said. Exports from countries such as Thailand, Vietnam and Myanmar are likely to fill any gaps.

India raised prices paid to local farmers for common grade paddy rice by 13 per cent from a year ago to 1,750 rupees ($25.50) per 100 kg.

The government typically buys more than a third of the country`s rice output at a fixed price, which also has a direct impact on prices paid by traders.

India`s rice exports in the 2017/18 fiscal year that ended on March 31 surged 18 per cent from the year before to a record 12.7 million tonnes on strong demand from Bangladesh and Sri Lanka. But that demand has already been hit hard with Bangladesh imposing a 28 per cent tax on rice imports in June to support local farmers.

Further few Indian states like Chhattisgarh has announced additional payments to farmers on top of the prices fixed by the central government. This will further widen the gap between local and international prices, industry sources said.

Shekhar Ghosh is consulting editor, Indoasiancommodities.com. He has edited and written for publications like Business India, Business Standard, Business Today, Outlook and many other international publications. He can be reached at shekhar.ghosh@indoasiancommodities.in.

Share

Leave a Reply

Your email address will not be published. Required fields are marked *