Mumbai: Rice exports from India, the world’s second-biggest grower of the grain, may fall this year as gains in the rupee make overseas shipments less competitive and domestic consumption increases.
Exports in the year ending 31 March 2008 may drop at least 20% from the 3.6 million tonnes (mt) shipped last year, said R.S. Seshadri, director of New Delhi-based producer Tilda Riceland Ltd.
Reduced shipments from India may help Thailand, Vietnam and Pakistan boost their share of the world rice market and extend the past year’s 28% gain in prices on the Chicago Board of Trade.
The rupee has gained more than 8% against the dollar this year to its highest in almost nine years.
“The advantage we had over exporters from Pakistan and Vietnam has eroded because of the rupee’s appreciation,” said Seshadri in a telephone interview.
The US currency has dropped 6.1% against the baht this year and is little changed against Vietnam’s dong and Pakistan’s rupee.
Gains in prices of wheat, a competing cereal, prompted some consumers in the world’s second-most populous nation to eat more rice, reducing the amount available for export to West Asia, West Africa and Sri Lanka, R.C. Bhimjyani, director at Mumbai-based RT Exports Ltd said.
“The bigger challenge now is to sustain production to meet the local demand,” he said. “Rising consumption will affect exports,” he added.
A stronger rupee hasn’t curbed demand for basmati rice. The nation may ship 1mt of the fragrant, long-grain rice, little changed from a year ago, said Anil Adlakha, executive director of the Rice Exporters Association.
India supplies basmati rice, grown in the foothills of the Himalayas, to West Asia and Europe. The country competes with Pakistan, which is the only other producer of the variety. Saudi Arabia is India’s top customer of basmati rice.
Indian parboiled rice sells at an average $275-300 (Rs11,275-12,300) a tonne while basmati rice fetches $800-1,000 (Rs32,800-41,000) a tonne, Bhimjyani said.
India may produce 91.05mt of rice in the year ending June, little changed from a year earlier, according to the agriculture ministry. The country consumes about 90% of its production.
“A lot will depend on how the monsoon fares and what the farmer plants in the coming months,” said Adlakha. “As of now, I would like to keep my fingers crossed.”
The June–September rainy season will be 95% of the average reported between 1941 and 1990, a level considered normal, the meteorological department had said on 19 April. The country’s 234 million farmers rely on the four-month rainy season to water most of their crops.