Indian agri export business hit hard by outbreak in European Union, West Asia
Shipments of non-basmati rice from southern Indian ports have nearly come to a standstill, say exporters
From rice and buffalo meat to perishables, such as bananas, exports of major agricultural produce from India has been hit due to the worsening coronavirus outbreak in the European Union (EU), West Asia and South-East Asia.
While traders have not been able to resume work at import hubs, including Singapore and Hong Kong, disruptions to logistics and non-availability of container ships have hurt farm produce exports.
This, despite the fact that food products were essential commodities for the importing countries.
For instance, India is the largest exporter of rice in the world, but shipments of non-basmati rice from Southern Indian ports have nearly come to a standstill.
“We have witnessed a 90% loss of business since end of January,” said Veera Pandian, a trader who sends shipments from Chennai and Krishnapatnam port.
He said traders in Singapore, Hong Kong and Dubai, who serve markets in Malaysia, Indonesia and African nations, are not coming forward to purchase.
“Everyone is stuck at home,” Pandian said.
India exported over ₹53,700 crore worth of rice in 2018-19, out of this, non-basmati rice accounted for ₹20,900 crore.
According to Chennai-based Vishnu Kumar, who exports premium non-basmati rice to the EU, West Asia and the far East, availability of containers and higher freight rates have emerged as a big challenge.
“In the past 15 days, enquiries have dropped and there were no fresh orders.” Traders from Doha have also sought for declarations that the rice was not infected by coronavirus. The volatility in exchange rates has added to the woes.
Exports of premium basmati rice, which has been facing headwinds due to higher than mandated pesticide residues (in the EU), and a payment crisis coupled with economic sanctions (in Iran) have been further impacted due to the Covid-19 outbreak.
“Everyone’s attention is geared to fighting the virus... so traders in Doha, Dubai and other places are taking it slow,” said a basmati rice exporter from Haryana, requesting anonymity.
However, logistical issues, such as a severe shortage of containers, is a bigger challenge, he added.
Not just rice, exports of perishables like bananas have also been severely affected, leading to a dip in farm gate prices.
“Disruptions in logistics, both ship and air, have emerged as the biggest challenge,” said Pankaj Khandelwal, managing director, INI Farms, which supplies fresh bananas to West Asia.
For instance, banana prices at the farms in Maharashtra and Andhra Pradesh have fallen by 30% within two weeks.
“We need to ensure that documentation work in Indian ports continues, and truck movement for perishables are not impacted by internal restrictions,” Khandelwal added.
Buffalo meat, India’s second largest farm export, valued at ₹25,000 crore for 2018-19, has also been hit by the Covid-19 pandemic. The industry lost business worth ₹1,500 crore in February due to the outbreak in China, said Fauzan Alavi, vice president, All India Meat and Livestock Exporter’s Association.
Export units are now facing a shortage of shipping containers, but with the situation in China improving, enquiries have started, he added.
“This is an unprecedented short-term supply shock in food trade,” said S. Chandrasekaran, a Delhi-based trade policy analyst and author of Basmati Rice: Natural History and Geographical Indication.
Export demand is likely to fall in coming months as importing countries reduce their demand and bargain for a better price due to the economic shock from the coronavirus pandemic, he added.
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First Published:20 Mar 2020, 06:26 PM IST
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