COVID-19: As fears over rice exports grow, India may continue selling

By Pratik Parija

India’s top rice shippers are convinced the government won’t follow other nations in adopting restrictions on grains exports as the country has more than enough supplies to meet domestic demand.

Record harvests mean rice production will climb to 117.47 million metric tons in 2019-20, while wheat output may rise to an all-time high of 106.21 million tons, according to the farm ministry. Bumper crops will help the nation avoid curbs on overseas sales, according to some of the country’s key exporters.

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As the coronavirus continues to spread across the world, panic buying and concerns over supply chain disruptions have led several countries including Vietnam, Russia and Kazakhstan, to stop exporting some staple foods to shore up supplies at home. That’s raised questions over whether India, the world’s biggest exporter of rice, will follow suit.

“India is not deficient in production and, in the immediate foreseeable future, there does not appear to be a cause for concern over food security,” said Vijay Setia, director at Chaman Lal Setia Exports Ltd., a rice miller and exporter. “We may have sufficient surplus for exports.”

Continued shipments of rice from India may cool prices and stop consumers from panic buying. Vietnam, the world’s third-largest shipper, has temporarily suspended new rice exports, while Myanmar also said it may cut overseas sales to avoid domestic shortages.

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Fears of shortages have helped prices of Thai white rice 5% broken, an Asian export benchmark, surge more than 25% this year to $564 a ton on Wednesday, the highest since 2013. Rough rice futures in Chicago are around the strongest for almost six years.

Biryani, Pilaf

Demand for Indian basmati rice, an aromatic grain used in dishes such as biryani and pilaf, has increased recently, mainly from the U.S. and Europe, according to Ashwani Arora, chief executive officer of LT Foods Ltd. There may also be an increase in demand from Middle Eastern countries, he said.

“That might increase exports” in the fiscal year from April 1, Arora said.

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Global milled rice production will be little changed from a year earlier at 499.31 million tons in 2019-20, according to data from the U.S. Department of Agriculture. Ending stockpiles are seen at a record 182.3 million tons, up about 4% from a year earlier, the data show.

While global grain stocks are relatively comfortable and the weather outlook this year fairly positive, countries may adopt export restrictions or boost stockpiling should the pandemic accelerate faster than expected or if the crop outlook deteriorates, Fitch Solutions said in a report. India has imposed export curbs during similar situations in the past, it said.

Though there are no concerns right now, “if the fear of the unknown prevails and markets get dented with hoarding etc., then of course respective governments have to resort to means at their disposal to handle the situation,” said Setia, a former president of the All India Rice Exporters’ Association, who has traded the commodity for more than four decades. “Imposing restrictions on external trade could be one such measure,” he said.

Shipments of rice have slowed a bit because of logistics issues, including a shortage of workers and truck drivers, caused by the nationwide lockdown, said Vinod Kaul, the executive director of the association.

Exporters are hesitating to sign new contracts with overseas buyers because of the slowdown in current shipments, he said.

“The lockdown will have some impact and we can’t avoid it,” Kaul said. “There is no move by the government to ban exports.”