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Rice exports for FY20 may fall; Geo-political situations, tighter trade norms, higher MSP to blame

FE Bureau
Rice exports, global markets, Drip Capital, Indian export basket, CAGR, annual exports, trade norms, Basmati rice

India's rice exports for FY20 are expected to fall due to geo-political situations, tighter trade norms and higher MSP of the commodity by the government, says a report by US-based trade finance company Drip Capital. India is the world's largest rice exporter with over 25% share in global markets.

The report states that within the Indian export basket, rice contributes to over 2% of overall exports. The sector reported a CAGR of 14% between FY2010 to FY2019. However, rice exports this year have seen a decline across the globe with a major dip coming from the Middle East due to heightened geo-political tensions. A resulting fall in prices has further aggravated the sector's woes.

Pushkar Mukewar, co-founder and co-CEO, Drip Capital said, "YTD exports so far are looking bleak with Iran, the biggest export market, seeing a 22% fall in shipments. Other export markets like the UAE (33%), Nepal (23%), Yemen (2%), Senegal (90%) and Bangladesh (94%) have also seen a fall in rice shipments from India. On the other hand, exports to certain nations broke the trend from past to post growth, such as Saudi Arabia (4%), Iraq (10%), Benin (8%) and the USA (4%)."

The report adds that Haryana is the top Basmati rice exporting state in the country with a CAGR of 3% between FY16-19, shipping $ 2,410 million worth of the commodity in FY19 alone. Gujarat is second with shipments worth $1,106 million in FY19, with an impressive CAGR of 47% over FY16-19. Other major contributing states are Delhi, West Bengal and Andhra Pradesh.

Rice being a kharif crop (August– November) shows a clear seasonal pattern in exports as well. The four months post-harvest (December–March) see over 40% of annual exports as compared to the rest of the year. The current year’s (FY19-20) rice exports have also been trending much below previous years' performance, the report said.