By James Mathew
India's overall rice exports to the Middle East set to fall both in volume and value terms in Q1 despite Saudi, UAE increases
India’s overall rice exports to the Middle East is set to see a significant decline in the current quarter, hit by the double whammy of coronavirus-related restrictions on movement of goods and a bumper production in the domestic market pulling down prices.
This is even as Indian rice exports to some of the select markets in the region including Saudi Arabia and UAE have witnessed an increasing trend in the recent months.
Indian exporters believe this could be because buyers in Saudi, UAE, etc, may be stocking up in anticipation of supplies getting hit by logistic related issues in view of the rising incidence of the virus infection to some of the countries in the region.
India’s overall export of basmati rice has fallen by 9.2 percent in volume terms and 19.3 percent in value terms in January this year, compared to the corresponding month of 2019.
Though official figures for February are not yet out, All India Rice Exporters Association (AIREA) officials have said the declining trend has persisted last month also due to shortage of containers and softening of prices.
“Exports to Saudi Arabia, Iraq and UAE, however, have seen an increase of 12,000 tonnes, 16,000 tonnes and 3,000 tonnes respectively in January 2020, compared to the corresponding month of last year, Vijay Setia, President, AIREA, told Arabian Business.
“Food is something on which people will continue to spend,” Setia said, adding that “therefore, we do not anticipate any fall in demand in our major markets in the Gulf region such as Saudi Arabia, UAE, etc.”
Availability of containers is a major problem being faced by Indian rice exporters currently.
China accounts for almost one-third of global availability of containers and its clamp down on movement of goods has severely affected availability of containers.
“Shortage of containers could lead to an increase in logistic costs,” Setia said.
“We are also forced to find alternate routes for supply to some of the markets in the Middle East due to Iraq’s decision to close its border with Iran in the wake of rise of coronavirus infection in Iran,” Setia said.
The exporters’ body said the overall impact of the rise in logistic costs – whether due to high costs for containers or costs going up due to alternate, longer supply routes – will be an increase in the landed price of rice in the Gulf markets.
Setia, however, said the softening prices in the Indian market due to increased productions will be a favourable factor for Indian exports to stem the adverse impact due to increase in logistic costs.
According to the Second Advance Estimates of foodgrains production released by federal agriculture ministry last month, India’s rice output is expected to be 117.47 million tones (MT) in 2019-20, as against 116.48 MT in the previous fiscal year.