Analysis: India may corner nearly half of global rice trade as exports soar to record

September 16, 2021

By Rajendra Jadhav

KAKINADA, India (Reuters) – India could account for as much as 45% of global rice exports in 2021 as expanded port-handling capacity allows the world’s second largest rice grower after China to ship record volumes to buyers across Africa and Asia.

The world’s top exporter could ship as much as 22 million tonnes of rice this year, or more than the combined exports of the next three largest exporters Thailand, Vietnam and Pakistan, said Nitin Gupta, vice president of Olam India’s rice business.

“Along with traditional buyers, this year China, Vietnam and Bangladesh are also making purchases from India,” he said.

India’s exports in 2020 jumped 49% from the year before to a record 14.7 million tonnes, as shipments of non-basmati rice spiked 77% to a record 9.7 million tonnes.

India on course to dominate global rice trade in 2021 as new port capacity boosts shipment potential https://fingfx.thomsonreuters.com/gfx/ce/mypmnogrzvr/IndiaSEAsiaRice.png

In 2021, non-basmati rice shipments could nearly double from a year ago to 18 million tonnes, while premium basmati rice exports are seen steady at 4 million tonnes, Gupta said.

The U.S. Department of Agriculture projects global rice exports of 48.5 million tonnes in the 2021-22 season.

LOGISTICAL BOTTLENECK

Indian rice has been consistently cheaper than supplies from Thailand and Vietnam since last March, while global demand for rice has scaled record highs.

India rice export prices sustain steep discount to Southeast Asian prices since early 2020 https://fingfx.thomsonreuters.com/gfx/ce/xmpjoklwmvr/IndiavsSEAsiaRicePrices.png

However, limited infrastructure at Kakinada Anchorage, India’s main rice port, led to persistent congestion and lengthy loading delays last year, prompting some buyers to switch suppliers.

India was offering a discount of more than $100 per tonne over other exporters, but much of the discount was wiped out by higher demurrage charges tied to the delays, says exporter Brahmananda Gudimetla.

To ease the congestion, the southern state of Andhra Pradesh in February allowed the use of an adjoining deepwater port at Kakinada for rice shipments.

“Vessel waiting period has gone down after the deepwater port started handling rice. Demand that could have shifted to other countries remained with us,” said B.V. Krishna Rao, president of the Rice Exporters Association of India.

India exported 12.84 million tonnes of rice in the first seven months of 2021, up 65% from a year ago, according to provisional data from the commerce ministry.

At least one million tonnes of rice would be shipped from the deepwater port in 2021, said M Muralidhar, chief operating officer of Kakinada Seaports Ltd.

SHIPPING SHAKEUP

Despite extra port capacity, Kakinada’s loading rate still lags well behind Southeast Asian ports due to a lack of dedicated rice-handling infrastructure.

“Here in Kakinada, it takes nearly a month to load around 33,000 tonnes of rice from the time we drop the anchor. In Thailand it takes only 11 days for the same quantity,” says Fahim Shamsi, caption of a ship that was loading rice at Kakinada this month.

Strain on the Kakinda port has increased after the cost of shipping rice by container surged, forcing rice shippers to switch from containers to bulk vessels, said Gupta of Olam.

Kakinada can export an additional 2 million tonnes of rice if infrastructure was upgraded and the process mechanized, Rao said.

India’s exports of non-basmati rice go mainly to African and Asian countries, while premium basmati rice goes to the Middle East, the United States and Britain.

(Reporting by Rajendra Jadhav; Editing by Gavin Maguire, Robert Birsel)