Rising freight rates impact India’s basmati exports to West Asia
Published on: February 12, 2022.
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Doubling of freight rates for shipments to West Asia from the beginning of February has started impacting basmati rice exports to the region. As a result, basmati exports are likely to decline more than 10% year-on-year in this financial year, said industry executives.
West Asia has traditionally been the largest buyer of Indian basmati rice, accounting for 85-90% India’s basmati exports.
“In the first nine months of the current financial year, basmati exports were down by 38%
compared to the same period last financial year,” Vinod Kaul, executive director, All India Rice Exporters Association (AIREA), told ET. “The trade was expecting exports to go up in the fourth quarter of FY22 as the Ramadan month of April was coming when the Middle East buys good quantities of basmati rice.”
The surge in freight rates will hurt exports, said Kaul. “The freight cost has more than doubled in the last ten days beginning February. The freight rate was $1,100 per container at January-end which has shot up to $2,300 per container now,” he said.
India exported 4.6 million tonnes of basmati rice in 2020-21. But this fiscal, exports are unlikely to cross 4.1 million tonnes, said Kaul. “The payment problem with Iran continues, though some exports are happening through third currency payments which are permitted by the Reserve Bank of India,” he said.
However, while basmati rice exports are reeling under rising freight rates and exporters have no choice to send the rice to other destinations, non-basmati rice exports are doing exceedingly well.
Exports of non-Basmati rice are expected to cross 17 million tonnes this fiscal, said BV Rao, president, Rice Exporters Association. Exports crossed 12.53 million tonnes in the first nine months of 2021-22, as against 13 million tonnes in the entire 2020-21. Non-basmati rice exports increased 51.8% year-on-year between April and December last year due to higher purchases made by China and Bangladesh.
Source: https://economictimes.indiatimes.com/news/economy/foreign-trade/rising-freight-rates-impact-indias-basmati-exports-to-west-asia/articleshow/89482654.cms
