Export prohibition on non-basmati white rice and broken rice and a 20% tariff on the parboiled variety are reasons behind dip

Puja Das

In the first three months of FY25, the fall in exports of non-basmati white rice has been in the same period the highest, around 78% at nearly 300,000 tonnes followed by another 300,000 tonnes of broken rice and 1.5 mt of parboiled rice, a drop of 8% and 11%, respectively,(Mint)

Rice exports during April-June of the current financial year have fallen by nearly 34% to 3.2 million tonnes (mt) after the Centre banned outward shipments of non-basmati white rice and broken rice and a 20% tariff on the parboiled variety.

Exports of non-basmati white rice plunged a massive 78% to nearly 300,000 tonnes. Broken rice fell 8% to 300,000 tonnes while parboiled rice dropped 11% to 1.5 mt, a government official said.

Bans on exports

The ban on exports of broken rice was slapped in September 2022 to ensure adequate supplies for poultry and other animal feedstock..

The prohibition on non-basmati white rice was announced last July to safeguard domestic food security and protect consumers from price shocks while allowing farmers decent prices amid El Nino disrupting rainfall that resulted in lower crop output. 

Additionally, it slapped a 20% export duty on parboiled rice and fixed a floor price for basmati rice last year.

Despite the government setting a minimum export price of $1,200 per tonne on basmati rice last august to prevent shipments from false labelling and lowering it to $950 in October, its exports in April-June have been 16% higher at 1.1 mt, the official said.

In the FY24, India exported a total of 15.7 mt of rice, including 2.36 mt of non-basmati white rice, 545,000 tonnes of broken rice and 7.57 mt of parboiled variety, against 21.8 mt in FY23. India is the second-largest producer of rice after China and the largest exporter globally, contributed at least 40% to the global trade until export curbs were imposed.

India has faced a backlash for not letting rice exporters engage in the World Food Programme (WFP)’s rice tender process. At the 13th World Trade Organization (WTO) ministerial conference in February-March, the US said India should end these measures and notify them in compliance with its WTO obligations, expressing deep concern. 

This was despite India making an exception and permitting exports of some quantity of banned rice varieties to certain needy countries to meet their food security needs, though on a government-to government basis.

At the 12th WTO ministerial conference in Geneva in 2022, WTO members had approved a decision to exempt the WFP’s humanitarian food purchases from export restrictions. India had initially not been in favour of the decision as it wanted to retain the flexibility of imposing export restrictions to ensure its domestic food security, but later relented.

“It indicates that India is not only trying to address its food shortages but is also sensitive to shortages in the global market which in turn could adversely impact smaller developing countries dependent on food imports,” an international trade policy and WTO expert said, requesting anonymity.

Queries sent to spokespeople and secretaries of commerce, external affairs and food and public distribution ministries remained unanswered at press time.

Meanwhile, trade bodies and associations, including the Rice Exporters Association (TREA), have urged the Indian government to lift the ban on non-basmati white and broken rice and allow shipments with a fixed duty.

They are hopeful that the government will take a call in their favour due to surplus government stock and in anticipation of adequate rainfall this year.

“We are hopeful that something on non-basmati white rice will happen soon considering the government stocks and good monsoon. Rice is a three-month crop and price distortion will anyway be corrected as soon as the fresh crop hits the market from November. The government is concerned about inflation, but rice is not contributing much to inflation, and hence we’d like to emphasis to the government that inflation is not on account of rice which is publicly consumed under PDS (public distribution system); it is due to the rice variety consumed by the middle-and upper-class population,” TREA president B.V. Krishna Rao told Mint.

“FCI warehouses are already full. Fresh crop will come from November. If it does not vacate warehouses for new crops, it will not be able to give MSP support to farmers. If the government lifts the ban or allows exports with certain tariff, millers will buy paddy, mill it and export it. Even the varieties that otherwise goes to the FCI, millers buy it and export it to countries like Africa because it purchases only the PDS variety from India as they cannot pay more than ₹30 for a kg.”

Published Date: July 2, 2024