By Viexports The path to standardize rice exports from India will likely be because of the policy uncertainty and the rigour of local prices despite trade restrictions. About the increased domestic prices and exports in 2023, the Indian government banned exports of white rice that were not basmati, limited duty to 20% on parboiled rice exports, and set the minimum price for export of basmati of $950/mt.
Furthermore, India inflicted curbs on rice exports, which triggered a stir in the world market in 2023. Consequently, prices have been pushed to record highs for the past several years, and they are expected to continue at a minimum until the beginning of the second quarter of 2024, according to the most recent market data.
Updates on the Rice Export Restriction From India
Most trade sources stated they had not seen any government decision to lift the restrictions before the general elections between April and May 2024. In reality, the government may be looking to ensure a massive rice harvest during the 2024 kharif period before lifting the curbs on exports.
The lower production of rice during the kharif season 2023-24 could be due to dry weather conditions brought on by the El Nino weather phenomenon, and an inefficient start to the sowing of rabis has stopped the increase in the supply situation shortly.
In addition, the US Department of Agriculture’s India attache has revealed India’s total rice production at 128 million mt for this MY 2023-24 (October-September) compared to the 135.5 million mt the previous year.
Despite trade restrictions, local rice prices have remained steady throughout the harvesting season of 2023. This prompted the government to release an alert for retailers to cut costs.
Increase In Global Demand for Basmati Rice
West Africa is one of the main buyers of Indian white and parboiled rice. This region is highly price sensitive, and higher prices usually decrease the demand, compared to large buyers of Southeast Asia, where the buying capacity is significantly higher.
In 2023, most buyers from Africa have imported huge quantities of rice. They are also predicting restrictions on exports in India. This option is no longer available for rice buyers despite the strict limits.
So, the amount of rice purchased from West Africa has already declined, and if the price of rice remains high, India’s non-basmati boiled rice exports are likely to be at a different level than in 2023. But demand comes from Southeast Asia, and a few Gulf countries must reach the limit. However, the West African market can only be active if prices exceed $500/mt FOB. Remember that West African countries are processing/milling more rice every year.
Stable Demand for Basmati Rice Globally
Most trade sources indicated that the demand for basmati rice will likely remain stable throughout the coming year. However, the higher cost of logistics and the existence of a minimum price for exports can be a problem.
Based on skilled exports, a slight price increase only affects some basmati demand. If the disruption in shipping in the Red Sea persists for a prolonged period and causes a disturbance, that may cause exporters to lower prices. However, most exporters think that even if Red Sea problems continue, Basmati exports will likely adjust to the new circumstances without a major impact on the whole trade.
In the 22.3 million tonnes of rice India exported during MY 2022-23 (April-March), 10.4 million millimetres were shipped to East, west and North Africa. In contrast, 4.4 million mt was delivered to East and West Asian countries, which include Gulf Cooperation Council countries.
Basmati Rice Market Segment Analysis – By Type
The basmati rice market dep, ending on the rice type is fur, then divided into raw and parboiled. The kind of parboiled basmati rice has dominated the market since 2021. It has an excellent nutritional value when compared with white-polish rice. It also has fewer calories, fewer carbs and more fibre, proteins, amino acids and folic acid. It further improves gut health and lessens the impact of blood sugars, affecting the market growth for basmati rice.
The raw basmati rice market is predicted to increase with the highest CAGR of 10.6 per cent over the 2022-2027 forecast timeframe. This is due to its high nutritional content in comparison to other varieties of rice. The most up-to-date research by the experts suggests that eating whole grains such as brown basmati rice is directly linked to a lower risk of heart disease due to decreasing blood cholesterol levels and the possibility of having elevated blood pressure. Therefore, it boosts the popularity of this particular basmati rice type. It is also expected to increase its market share for basmati rice during the forecast time.
Basmati Rice Market Segment Analysis – By End-use
Depending on the end-use, the market for basmati rice could be further divided into industrial and household. Industrial uses have maintained their dominance over the market since 2021. This is because of the rising demand for Basmati rice in food and beverages, bakery, the cosmetic industry, and nutraceuticals.
However, the use of rice by households is expected to grow at the fastest rate of 11.0 per cent over the 2022-2027 timeframe. Rice is a common ingredient in many Asian dishes. It is a great source of protein, carbohydrates, folic acid, and d and amino acids.
Since Asia is home to as much as 60 per cent of the world’s population, the market for Basmati rice continues to increase worldwide. The rising demand for basmati rice triggers the market share expansion for basmati rice.
Conclusion
Overall, a steady consumption of basmati rice may encounter some issues due to higher logistics costs and the low export price. Positively, India’s rice stock in the Food Corporation of India’s central pool is 56 million mt until the 1st of December. While there are some concerns over long-term restrictions, the levels exceed the buffer stock norm set by the government, suggesting an eventual relaxation of the ban on rice exports.
India is among the biggest exporters of rice worldwide. With such a huge rice reserve, the government has to ease restrictions because they are not sustainable. Indeed, most exporters are confident that a quick return to the market this year will eventually increase the availability of paddy for exports.
