Centre announces 5 per cent subsidy to boost rice exports

Non-basmati shipments to get subsidy from Nov 26 to March 25

As a 13 per cent increase in minimum support price (MSP) for paddy slows down India’s rice exports in the current financial year, the Centre has announced incentive to boost the shipments of the cereal. The non-basmati rice exports will get a 5 per cent subsidy under the Merchandise Exports from India Scheme (MEIS) from November 26 till March 25, 2019, a Commerce Ministry note said. The Centre’s latest move to subsidise the non-basmati rice shipments for the first time since exports were opened up in 2011 assumes significance as the country is headed for a record harvest of rice, pegged at 99.24 million tonnes by the Agriculture Ministry in its first advance estimates.Also, the rice stocks in the Central pool as on November 1 stood at 16.25 mt, over 60 per cent higher than the buffer norms.

The harvest of paddy has already commenced in several States and the state agencies led by Food Corporation of India have already started the procurement of the cereal. “The 5 per cent incentive under MEIS will definitely enhance our competitiveness in the world market,” said BV Krishna Rao, President of the Rice Exporters Association, a trade body of non-basmati rice millers and exporters. The subsidy coupled with a weak currency would help us offset the impact of the MSP on exports and cover the shortfall in shipments, Rao said. The Centre had increased the MSP for paddy by ₹200 per quintal at ₹1,750 per quintal for common variety and ₹1,770 for Grade A.

Slowing exports

Indian’s non-basmati rice exports have slowed down during the past couple of months and exporters said the hike in MSP had hit their competitiveness in the world market thereby impacting the exports. In the first half of the current financial year, the shipments were down at 3.72 mt (4.28 mt in corresponding last year) valued at $1.59 billion ($1.74 billion). The opening up of non-basmati exports in 2011 has helped India emerge the largest rice exporter for past several years. Major markets for the non-basmati rice are the African and Asian countries. India, which ships out over 12 mt of rice, now accounts for over a fourth of the annual global rice trade estimated at around 47 mt by the Food and Agricultural Organisation. India competes with Vietnam, Thailand and Pakistan in the world rice market.

India’s total rice production during 2017-18 stood at 112.91 mt and the government is targeting 113 mt this year. The FAO in its recent biannual Food Outlook has forecast that global rice production is set to increase by 1.3 per cent to a new high of 513 mt this year and India would be spearheading the growth in production.

Basmati paddy price surges 25% on expectation of output decline

Rising demand also behind rise in price KOLKATA, OCTOBER 25

Basmati paddy prices have firmed up by 25-30 per cent on the back of speculation of a drop in production and firm demand both in domestic and export markets. The price of the premium Pusa 1121 variety of basmati paddy is presently ruling at around Rs. 3,700 a quintal, as against Rs. 2,800 a quintal during the same period last year, recording a rise of nearly 32 percent. The price of Pusa 1509 is also up by 29 per cent at Rs. 3,100 a quintal. Harvesting of basmati paddy, primarily cultivated in Punjab and Haryana, starts in October and continues till December.

"As per satellite data the area under basmati paddy cultivation is down by 2-3 per cent this year and the carry-forward stock from last year is also low. This, coupled with a firm demand for exports, has helped push up prices," Vijay Sethia, President, All India Rice Exporters’ Association (AIREA), told BusinessLine. While the area under paddy cultivation is slightly lower this year, the yield is better because there has been a shift to Pusa 1509, a high-yielding variety that produces close to 24-28 quintal an acre, as compared to Pusa 1121, which yields 18-22 quintal an acre. The country produces close to 9 lakh tonnes of basmati paddy each year, from which nearly six lakh tonnes of rice is produced. According to Suraj Agarwal, CEO, Tirupati Agri Trade, unseasonal and heavy rains in the months of August and September have affected the standing crop marginally, which may have an impact on production.

However, the rise in prices is more on account of a strong demand from overseas markets. Typically there is a dip in price when the new crop begins to arrive in2 the market; however, prices have increased in the last 15-20 days, sources said. Pusa 1509 has moved up by nearly 19 per cent from Rs. 2,600 a quintal and Pusa 1121 by close to 9 per cent from Rs. 3,400 a quintal just about 20 days ago. “Production is almost similar to last year; the price rise is more due to speculation of a possible dip in production,” said Gurnam Arora, Joint Managing Director, Kohinoor Foods. Rice prices firm up Firming up of paddy prices over the last two procurement seasons coupled with a strong demand from overseas markets, particularly Iran, has helped boost average realisation of basmati rice. The price of basmati rice has increased by nearly 12 per cent to Rs. 73,000 a tonne this year, as compared to Rs. 65,000 a tonne last year. In the period from April to August of the current fiscal, India exported close to 1.85 million tonnes of basmati rice valued at Rs. 13,629 crore. The country exported over four million tonnes of basmati rice valued at around Rs. 26,870 crore in FY’18. Iran and Saudi Arabia together account for nearly 50 per cent of imports.

“In the first four months of the current fiscal year, Iran has already imported close to 70 per cent of its previous fiscal’s total basmati rice imports from India,” said Deepak Jotwani, assistant Vice-President, ICRA. AIREA along with APEDA and the Punjab government, has also been taking several initiatives to boost exports to the US and Europe by educating farmers against pesticide use. It is to be noted that several export consignments of basmati were rejected by the US and the EU because of high pesticide residue last year. Saudi Arabia has also been following the European Union by tightening pesticide residue parameters.

Foodgrain

Riding on a near normal monsoon, output of most food crops is projected to hit record levels in 2017-18 to give an all-time high foodgrain harvest of 284.83 million tonnes, 3.5 per cent higher than that of the previous year, according to the 4th advance estimates released on Tuesday.
Rice production is expected to touch a peak of 112.91 mt, 3 per cent more than last year’s, while wheat will just fall shy of the 100-mt mark, the data released by the Agriculture Ministry showed.
Pulses production, on the other hand, is seen crossing 25 mt, despite a substantial fall expected in tur production. The record increase expected in urad and gram will compensate for the tur shortfall.
Despite an anticipated 17 per cent drop in soybean output to 10.98 mt, total oilseeds production is projected to be similar to that of the previous year, at 31.31 mt, thanks to an impressive recovery expected in groundnut output at 9.18 mt, nearly 23 per cent higher than the 7.46 mt in 2016-17.

The production of coarse cereals too is expected to climb to a new high of 46.99 mt, up 3.22 mt from 2016-17, despite bajra yields being projected to slide 5 per cent.
A record 20 per cent increase in sugarcane production in 2017-18 to 376.9 mt has already precipitated a severe crisis in the sugar sector, requiring the government to intervene so that the sugarcane farmers, whose dues from sugar mills have mounted, get some reprieve. Cotton output, too, is projected to go up by more than 2 million bales (of 170 kg each) to 34.89 million bales, according to the official data.
The estimated maize output will be 28.72 mt, which is nearly 3 mt more than the final production in 2016-17.

Increase in paddy support price: Rice exporters concerned over competitiveness in global market

A 13 per cent increase in MSP of paddy has sent jitters among the non-basmati rice exporters, who fear that the price rise will make the Indian cereal unviable in the global market and threaten India’s position as the largest exporter of rice, they said. "While we welcome the increase in MSP for farmers, the government should also look at sustaining the growth in rice exports," said BV Krishna Rao, President of the Rice Exporters Association.

Govt incentives

The government could look at incentivesthrough schemes such as Merchandise Exports from India Scheme or interest subvention, he added. The rice exporters are planning to take up the issue with the Commerce Ministry soon.

Non-basmati shipments

Non-basmati rice shipments have emerged as a major component of the Indian farm produce exports in recent years helping the country to emerge as the largest exporter of the cereal. Non-basmati rice exports stood at 8.6 million tonnes (mt) valued at $3 billion last year. In the current, financial year, the shipments have maintained the growth trend with a weakening rupee aiding the exports. As per the latest data from Apeda, non-basmati rice shipments have grown 40 per cent in the first two months of current, financial year at 1.43 mt valued at $603 million ( Rs. 4,013 crore) over the corresponding last year. The non-basmati rice accounts for around a fifth of the Apeda’s export basket in value terms.

Export markets

Of India’s total rice production of 108 mt, the domestic consumption including the buffer stocks is estimated at around 97-98 mt, while the rest is exported mainly to countries in Africa, Bangladesh and SriLanka. Any slow-down in shipments will lead to accumulation of stocks and may influence the prices, the exporters said.

We were in the dark about Jordan’s new residue norms, claims rice exporters body

The All India Rice Exporters Association (AIREA) on Thursday said it has taken up the issue of Jordan rejecting rice containers of an Indian exporter early this week with agricultural and Processed Food Products Export Development Authority (Apeda) and Jordan Chamber of Commerce. Jordan’s Agriculture Ministry has denied permission for offloading 12 containers carrying 270 tonnes of basmati rice from a North Indian exporter at its Aqaba port as Jordanian government laboratories found the pesticide residue in rice samples examined were higher than the maximum residue level (MRL). “The samples were found to have residue level (of fungicide tricyclazole) higher than it is now permitted. However, what is strange was that Jordan did not notify its decision to revise MRL and as a result, this information was not publicly available,” said AIREA Executive Director Rajen Sundaresan.

EU norms
“All of a sudden, Jordan has decided to adopt the European Union (EU) norms for tricyclazole residue, which stands at 0.01 parts per million (ppm). We had little knowledge about this,” he said, adding that the association has already written to Apeda and Jordan Chamber of Commerce. From January 1 this year, the EU decided to not allow the import of basmati rice whose tricyclazole levels exceed more than 0.01 ppm to its member countries, affecting most basmati exporters from India. Prior to the implementation of new norms, the MRL in Indian basmati was 1 ppm. The tolerance levels for tricyclazole in the US and Japan, interestingly, are much higher, at 3 ppm and 10 ppm respectively. Indian rice exporters have been lobbying with the Central government for getting the new norms relaxed by the EU for two years.

Options left
Sundaresan, who refused to name the exporter whose consignment has been blocked, said the options available to them include bringing the consignment back to India, or destroying it or re-routing the shipment to the countries where such MRL is permitted.
“The tricyclazole levels permitted in India is 3 ppm. When the consignment left India it was within the permissible limits. But Jordan has suddenly decided to follow the EU regime. We have written to them to find out since when it has come into effect,” the AIREA official said.