India bans broken rice export amid likely drop in kharif production by 10-12m tonnes
The government has banned the export of broken rice to control rising retail prices and boost domestic supply after a decline in planted area is expected to lower the country’s output by 10-12 million tonnes this kharif season .
A 20 percent export duty was also imposed on non-basmati rice, except parboiled rice, to discourage exports.
Explaining the rationale for the ban, Food Secretary Sudhanshu Pandey told reporters that there had been an “absolutely abnormal” increase in shipments of broken rice and that the broken grains were not no longer available in sufficient quantities for animal feed as well as the ethanol blending program. .
India, the world’s second largest rice producer after China, holds 40% of world trade. The country exported 21.2 million tons of rice in 2021-22, including 3.94 million tons of basmati rice.
“The broken rice export policy…is changed from ‘Free’ to ‘Prohibited’,” the Directorate General of Foreign Trade (DGFT) said in a notification dated September 8, 2022.
The notification takes effect from Friday, September 9, 2022.
Pandey said the country exported 3.89 million tonnes of broken rice in 2021-22, a big increase from 1.22 million tonnes in 2018-19. China imported 1.58 million tons of broken rice last year.
In the April-August period of this fiscal year, broken rice exports increased to 2.13 million tons from 1.58 million tons a year ago and only 51,000 tons in 2018-2019.
”It (the export) multiplied almost 42 times. It is therefore not (just) an abnormal increase in exports. It’s absolutely abnormal,” Pandey said.
India’s total rice exports rose to 21.23 million tonnes in the last financial year from 17.78 million tonnes in the previous year and 9.51 million tonnes in 2019-20.
In the April-August period of FY23, the country has already exported 9.35 million tons of rice compared to 8.36 million tons in the previous year period.
“From April to August of this fiscal year, the export share of broken rice increased to 22.78 percent from 1.34 percent in the corresponding period of 2019-2020,” the secretary said.
Apart from the sharp increase in exports, Pandey said domestic wholesale and retail rice prices are showing an upward trend.
“The change is greater than the increase in MSP (minimum support price),” he told reporters here.
Wholesale prices increased by 8% to Rs 3,291 per quintal as of September 7 against Rs 3,041 per quintal a year ago, while retail prices increased by 6.38% to Rs 37.5 per kg against Rs 35.25 per kg.
Pandey said feed prices have also risen. The price of maize increased from Rs 19 per kg on 1 January 2022 to Rs 24 per kg on September 8, 2022. The price of broken rice also increased from Rs 16 per kg to Rs 22 per kg during the same period .
In addition, he said imposing export duties on all non-basmati rice except parboiled rice would help cool prices.
The international price of Indian rice (non-basmati and others) is around 28-29 rupees per kg, which is higher than the domestic price.
No policy changes are being made to parboiled rice so that farmers continue to fetch good remunerative prices, according to a government presentation made at the briefing.
Pandey said there were no bans or tariffs on basmati rice exports.
Basmati rice shipments fell to 3.94 million tonnes in the last fiscal year from 4.63 million tonnes in 2020-21. However, during April to August this fiscal year, exports of premium basmati rice increased to 1.82 million tonnes from around 1.7 million tonnes a year ago.
In accordance with the notification from the DGFT, the provisions of the 2015-2020 foreign trade policy concerning the transitional regime are not applicable to this notification. He added that from September 9 to 15, some shipments of broken rice will be allowed to be exported.
On Thursday, the government imposed a 20% export duty on non-basmati rice, excluding parboiled rice.
According to a notification from the Revenue Authority, a 20 percent export duty has been imposed on “husked rice (paddy or raw rice)” and “husked rice (brown)”. The export duty comes into force from 9 September.
The broken rice ban and 20% export duty on non-basmati rice, except for parboiled rice, were imposed amid concerns about the likely decline in rice production.
As of September 2, the area under paddy cultivation had decreased by 5.62% to 383.99 lakh hectare in the current Kharif season due to poor rains in some states.
According to the food secretary, rice production could fall by 10-12 million tonnes this kharif season due to a drop in the area sown to paddy.
However, he claimed that the country will have excess rice production and this is a first estimate based on the decline in area and average yield.
Pandey pointed out that paddy area is 38 lakh hectare less so far this kharif season, due to less rains in many states.
The kharif season contributes about 80% of India’s total rice production.
Pandey said the decline in production may be less as yield may improve in states where the rains have been good.
Total rice production in the 2021-22 crop year (July-June) is estimated at a record 130.29 million tonnes. It is 13.85 million tonnes higher than the average production of the last five years of 116.44 million tonnes.
(This story has not been edited by the Devdiscourse team and is auto-generated from a syndicated feed.)