Impact on Rice Trade Due to Red Sea Crisis, According to Minister Goyal
Published on: December 29, 2023.
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Red Sea Crisis May Impact Rice Exports, Says Commerce Minister
The ongoing crisis in the Red Sea is expected to potentially disrupt rice trade, with further clarity on the situation expected next month, according to Union commerce minister Piyush Goyal. India, a leading exporter of basmati rice, ships out over 4 million tonnes annually. The country has already signed contracts to export 500,000 tonnes of new season basmati rice to Europe and the Middle East. However, trade route disruptions in the Red Sea region could impact these plans and lead to an increase in rice prices, primarily due to rising logistics costs.
Recent attacks by Yemen’s Houthi group using drones and missiles on commercial ships in the southern end of the Red Sea have caused concern in the industry. The Middle East, which is a major export market for basmati rice, could experience the effects of the crisis.
While immediate effects have not been reported, Minister Goyal stated that the rice export industry has been affected. More concrete information will be available once the trade figures for December are released.
The disruption in shipping operations in the Red Sea region has resulted in increased logistic costs for various commodities, including rice, oil, and manufactured goods. As part of efforts to stabilize domestic prices, India had banned non-basmati white rice exports in June. In August, a minimum export price of $1,200 per tonne for basmati rice was implemented. However, the floor price was subsequently reduced to $950 per tonne in October.
According to data from the commerce ministry, rice exports have declined from $6.98 billion in the same period last year to $6.45 billion from April to November 2023.
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