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Rice exports may fall by 20 per cent this fiscal

Rice exports from India is set to fall 18-20 per cent this fiscal because of weak demand from West Asian countries. Geopolitical issues and financial sanctions on Iran are restricting exports.

This apart, tighter trade norms and higher MSP (minimum support price) offered by the government encouraged farmers to tap the domestic market more, rather than focusing on the daunting export markets.

Export potential

Rice contributes over two per cent of the overall exports from India. The sector had reported a CAGR (compounded annual growth rate) of 14 per cent between FY '10 and FY '19.

However, rice exports this year have seen a decline across the globe with a major dip coming from the West Asian countries amid heightened geopolitical tensions. It resulted in a sharp fall in prices and lower realisation for exporters, said a research report on India’s rice export, including that of basmati, by the US-based trade finance company Drip Capital.

Being a kharif crop (August - November), rice shows a clear seasonal pattern in exports as well. The four months post-harvest (December - March) see over 40 per cent of annual exports. The current year’s (FY19-20) rice export figures have also been trending much below the previous years’ performance. Pushkar Mukewar, co-founder and co-CEO, Drip Capital, said exports so far this fiscal are looking bleak with Iran, the biggest export market, seeing a 22 per cent fall in shipments. Exports to other countries have fallen, including the UAE (33 per cent), Nepal (23 per cent), Yemen (2 per cent), Senegal (90 per cent) and Bangladesh (94 per cent), he said. On the other hand, exports to some countries such as Saudi Arabia (4 per cent), Iraq (10 per cent), Benin (8 per cent) and the USA (4 per cent) have increased.

Global market share

India is the world’s largest rice exporter with over 25 per cent share in global markets.

Haryana, the top basmati rice exporting State, with a CAGR of 3 per cent between FY16-19, shipped rice worth $2.41 billion in FY19 alone. Gujarat is second with shipments of $1.10 billion in FY19. However, Gujarat has posted an impressive CAGR of 47 per cent over FY16-19. Other major contributing states are Delhi, West Bengal and Andhra Pradesh.