Curbs push up parboiled rice demand

Because of the restrictions on white rice exports by India, international rice prices have gone up by $100 a tonne in two weeks to $600-650 a tonne. In tandem, prices of Indian parboiled rice have gone up to $450-460 per tonne from $400 before 20 July. Indian prices are still cheaper than Thailand’s $575 a tonne. These are free on board (FOB) or loading prices, spot trade sources informed.

“Exports of raw rice have been banned. After the ban, West African nations that are dependent on Indian rice because of competitive prices are looking for cheaper varieties. Indian parboiled rice is cheaper than prices offered by Thailand, Vietnam, and Pakistan for the same or other rice varieties," said Agri Commodities Exporters Association President M. Madan Prakash..

“India offers rice at the cheapest rate to the global market, be it broken, white or parboiled. Now African countries cannot import Indian broken and white rice, they have no other option but to move to parboiled rice. Until there is a change in policy, parboiled rice is the next alternative."

India is the top supplier of parboiled rice in the global market with a share of 7-8 million tonnes. The other major exporter of parboiled rice is Thailand that supplies only a million tonnes (mt). Parboiled rice has a share of 20% in the global rice trade, of which India makes up 80% and Thailand the remaining 20%. Only southern African countries buy Thai parboiled, the rest preferring the Indian variety. India exports parboiled rice to about 10 countries in west Africa.

In the first three months of the current financial year, India exported 2.1 mt parboiled rice as compared to 1.7 mt during the corresponding period last year. In the case of non-basmati white rice, exports in the same period went up 58% to 1.8 mt, according to an export trade body data.

Higher exports along with an almost 7% hike in the minimum support price for paddy pushed up rice prices in India by around 11% in June and July. As a result, the government restricted exports of white rice, which accounts for about 33% in the non-basmati rice export basket.

Exports of broken rice had already been prohibited last September.

“When you restrict white rice and broken rice exports, you are removing almost 10 mt from the world market annually. So, to cope up with the shock, there could be speculation, short coverings, etc. When white and broken rice from India cannot be imported, people will switch to parboiled," said B.V. Krishna Rao, president of the Rice Exporters Association of India.

“It’s been two weeks since the ban on white rice exports. This is expected to continue before price stability comes in a month," he added.

Queries sent to the food, consumer affairs and commerce ministries remained unanswered at press time.

Unlike wheat, India’s absence in the global rice market makes a big difference as the country is the leading exporter with a 45% share.

Additionally, international prices of rice are firming up as southeast Asian countries focus on building buffer stock in anticipation of El Nino hampering rice production in the coming Kharif season.

“Prices are majorly increasing because of the supply tightness which is expected to be wider in anticipation of a drop in rice production in south and south-east Asian countries. Vietnam, Thailand and to some extent India fear that El Nino may affect rice production, making the authorities cautious," said farm commodities analyst Indrajit Paul.

“If some production drop takes place, there will likely be food shortages causing food inflation. rice is a staple food for majority of the population in south and southeastern Asian countries. Therefore, the governments have been focusing on building up rice stocks for the past three-four months, so that in any alarming situation they can feed their population."

In India’s absence, other big exporters like Vietnam, Thailand and Pakistan must bridge the gap of supply and demand, i.e., 50 mt globally. If their rice production also faces a hit, they will not be able to supply. There will be a severe crisis of rice availability, majorly to the nations like Africa that is dependent on India to meet its domestic demand," Paul added.

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Meanwhile, basmati rice prices are also on the rise. In about a fortnight, Indian basmati prices in global market have gone up 7-10% to ₹9,200-10,500 a quintal depending on the variety, according to trade sources.