India is the second-largest rice-producing country in the world. Rice is the major food crop that satisfies global hunger and the Asian nation holds the top spot when it comes to rice exports. Indian rice, especially long-grain fragrant basmati rice, has a great demand worldwide and riding on the back of high global demand, India commands a mammoth 40% share in the rice trade. Considering only the case of basmati rice, the exports of the long grain variety from India increased by 26% in the financial year 2022-23.
Owing to high margin, favorable climatic conditions, fertile soil, and irrigation facilities, a major section of farmers grow paddy every year. West Bengal, Uttar Pradesh, Punjab, Tamil Nadu, Bihar, Odisha, and Andhra Pradesh are some of India’s top rice producing states and owing to high paddy acreage and bumper harvest, India exports huge volumes of rice every year.
More than 150 countries around the world depend upon India for their rice needs and quality rice at affordable prices is the reason why India holds the top spot in rice exports year after year.
However, the export prices of Indian rice are at their highest since April 2021 which has affected the demand from the global buyers. Rise in the value of Indian currency and withdrawal of the government’s free-food grain distribution scheme have significantly led to price rise of Indian rice which is hampering the demand in the global rice market.
Increasing Rice Prices
Affordable prices and superior quality of rice help India stay on top of the global rice trade consecutively. However, a recent rise in rice prices is off setting the demand for Indian rice in the global market. According to Himanshu Agarwal, an exporter and executive director at Satyam Balajee said that the major reason behind the boost in Indian rice price is the free distribution of food grains by the Government. This led the exporters to sell the rice at higher prices in the global crop market. The 5% broken parboiled variety of Indian rice for export was quoted at $387 to $395 per tonne this week which is a bit high as compared to the export prices of the last week i.e. $375 to $382 per tonne. The prices of white rice were reported $398-$405 which increased to $435-$440.
Consequences Of Increasing Rice Prices Due to the major hit in the price of rice in India, global rice buyers are shifting their preference to Thai rice. Prices of Thai rice have also increased a bit. A look at the figures reveal that the price of Thailand’s 5% broken rice was $495 per tonne the previous week.
Owing to high prices of rice globally, buyers and importers of rice around the world are currently on a wait-and-watch mode and are not placing orders of purchase of rice actively.
Conclusion
Located in Asia, India is the largest rice exporter in the world, and quality rice at an affordable price helps the Asian nation to hold on to the top spot year after year.
However, fluctuations in Indian currency and withdrawal of GOI’s free grain distribution scheme, has fueled up prices of Indian rice and currently the prices stand at $387-$395. This has hampered the global demand for Indian rice significantly and the buyers from
around the world are on a wait and watch mode and are not actively buying rice recently.
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