After a tariff hike on certain varieties, the Center bans exports of broken rice


After imposing 20% ​​export duties on certain varieties of rice on Thursday, the Center in a late night order banned exports of all forms of broken rice with immediate effect in a bid to drive down prices .

The decision to ban broken rice exports is expected to stop the overseas shipment of about 4 million tonnes (MT) of rice, mainly to countries like China, where demand has grown exponentially in the past. recent months due to drought in their main growing areas.

Between April and June, about 1.8 MT of broken rice was exported.

Business and trade sources said that in total around 10 MT of exported rice (5.9 MT under export duty and 4 MT totally banned) out of the average annual exports of 21-22 MT will now be subject to some kind of of restriction.

Read also : As India grows in its exports to the United States, can it be the next China?

The broken rice ban came into effect on September 9, but the notification says that between September 9 and September 15, consignments and shipments for which loading began at ports and shipping invoices have deposited from vessels at berth or where shipments of broken rice were handed over to customs before the ban may be exported.

This exemption was granted to prevent transit shipments and goods that have already left the hinterland from piling up in ports as was the case when wheat exports were banned on May 14.

Last night the government imposed a 20% export duty on certain varieties of rice, but kept products like basmati and parboiled rice out of its reach. Trade sources have indicated that with a 20% export duty, several varieties of Indian rice will be priced out of the world markets, as prices will immediately increase by $60 to $80 per ton.

The cheapest in the world

Before the export duty, some varieties of Indian rice were priced around $380-400 per ton (FOB), while the nearest competitor’s price was higher than that, making Indian rice one of the cheapest available on world markets, which has stimulated its demand.

“This also resulted in thefts and allegations that rice intended for distribution through the PDS and also under the Pradhan Mantri Gareeb Kalyan Ann Yojana (PMGKAY) was being diverted to exports due to low price in international markets and strong demand,” a senior industry official said.

In fact, the quick succession in which decisions to first impose the export tax and follow it with a total ban on broken rice exports has fueled rumors that the Center may make a decision on the extension of the free food grain distribution program (PMGKAY) beyond September.

The distribution program of 5 kg of rice or wheat per person per month to the nearly 80 million beneficiaries of the National Food Security Law in addition to their regular monthly quota was launched during COVID-19 as a measure of well-being.

Since then, the program has been extended six times, the last in April for six months. Until now, most varieties of rice were not subject to any export duty.

Meanwhile, market sources said global rice markets may not stay in the current range for long as the rice harvest in China, which is a major consumer, comes under severe pressure. due to drought in many of its main producing areas.

Drought in major growing areas here in India has also pushed up the price of rice in domestic markets and, for different varieties, rates have increased by almost 6-20% since June. It is feared that kharif production will drop by 6 to 10 million tonnes this year compared to last year due to lower acreage.

In 2021, India produced around 111 MT of rice during the kharif season.

Rahul Chauhan, commodity analyst at iGrain India, said domestic rice prices will not drop much for a long time as global markets are tight and there is also insufficient grain supply in the domestic market.

On the planting front, the paddy area was about 6% lower than the area of ​​the same period last year as September 2 and so far about 96.5% of the normal area has already been covered.

The normal area is the average area of ​​the last five years, which in the case of paddy during the kharif season is 39.70 million hectares.

But, given that much of the planting took place outside the ideal window and the monsoon continues to play truant in the eastern Indian states of Jharkhand, Bihar, UP and of West Bengal, there is a lot of uncertainty about the final outcome.

In some states like Jharkhand, plantings are still terribly low and only reached 50% of normal area till 2 September.

The stock of rice in the central pool as of August 16 was around 26.35 MT, while the buffer as of October 1 should have been around 10.25 MT. These stocks do not require 12.24 MT of unmilled paddy located at the millers.


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