In 2024, Indian rice exporters are navigating a challenging landscape marked by policy uncertainties and elevated local prices, impeding the normalization of rice exports from the country. According to S&P Global Commodity Insights, the repercussions of the Indian government’s actions in 2023, such as the ban on non-Basmati white rice exports, a 20% duty on parboiled rice exports, and a minimum export price of USD 950/million tonnes (mt) for Basmati, continue to reverberate in the market.
The government’s decision to restrict rice exports was driven by rising domestic prices and the imperative to ensure an ample supply for the country. Industry experts speculate that these restrictions are unlikely to ease before the general election scheduled for April–May 2024.
Complicating the supply situation is the fall in rice production during the 2023–24 kharif season, influenced by El Nino-induced dry weather conditions. The US Department of Agriculture projects a total rice production in India of 128 million mt for the October–September period, down from 135.5 million mt the previous year.
Despite trade curbs, local rice prices remain robust, prompting government warnings to retailers. Millers and exporters foresee a sustained high-price environment until the next kharif harvest season, driven by high procurement prices offered by certain state governments and strong demand from southern Indian states.
West Africa, a significant consumer of Indian rice, may experience subdued demand due to price sensitivity. While Southeast Asia and some Gulf countries are expected to maintain stable demand, exporters anticipate challenges in West Africa.
The steady demand for Basmati rice might encounter hurdles due to higher logistics costs and the minimum export price. Despite shipping disruptions in the Red Sea, exporters believe that Basmati exports will adapt to the new reality without significant disruptions.
On a positive note, India’s rice stocks in the Food Corporation of India’s central pool stood at 56 million mt as of December 1, reflecting a 15% year-on-year increase. Despite concerns about sustained restrictions, the stock levels exceed the government’s buffer stock norm, providing hope for a potential relaxation of export constraints. Exporters remain optimistic that a slow start to procurement this season will eventually improve paddy availability for exports.