Basmati rice exporters from India are renegotiating with importers from Australia, Canada and the US

Economy


Basmati rice exporters from India are renegotiating with importers from Australia, Canada, the US and western Europe the new contracts to be signed by mid-October after a overseas cargo rates climbed about 50% over the past one month. Freight rates have gone up from $1200 to $1800 per tonne.

However, exporters say that even if they renegotiate with importers, they will not be able to recover the entire price hike in cargo. Also, the prices of the common variety of basmati rice, Pusa 1121, have fallen about a fifth compared to last year after shipments to Iran were halted because of non-payment of dues by the importers concerned. “Earlier, containers were coming from China and we were facing no problem. But since imports from China have come down, availability of containers has dwindled and we have to pay huge sums to shipping lines for exports,” said Gautam Miglani, owner of LRNK, a Haryana-based basmati rice exporter.

“Although we will be trying to renegotiate the contracts with foreign buyers in the backdrop of this rising cargo rates, there is no guarantee that we will be getting higher rates.” India annually exports 4.4 -4.5 million tonnes of basmati rice to the global markets. Miglani added that since there is an oversupply of basmati rice in the Indian market, the exporters are not in a favourable position to ask for higher prices from other importing nations. “Moreover, the pandemic has badly impacted the economic condition of most of the countries in the world. So we are doubtful of getting higher prices,” he said. A leading basmati rice exporter from Amritsar who did not want to be named said: “Cargo rates have been rising since the lockdown was withdrawn. But in the last one month, they have gone up sharply. We have made losses in the earlier contracts due to high cargo rates. But in the upcoming overseas deals, we will have to include the high price of cargo.”

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The industry players are also worried about Pakistan’s move to start exporting their basmati rice to Iran under the barter system. “If the payment issue is not sorted out with Iran, we will not be able to export to the country and subsequently lose the market there. It is the biggest export destination for Indian basmati rice,” said Miglani. BV Krishna Rao, president of Rice Exporters Association, said that the non-basmati rice exporters are also feeling the heat of rising cargo prices.

“Our product price is much less than the basmati rice exporters. We are in real trouble. One of the leading shipping companies has informed us that from October 15, it will increase cargo rate by another $500,” said Rao.



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