The global rice market has turned precarious following India’s ban on white rice exports. It has totally become a seller’s market with prices of even cargoes in transit being hiked by $50-100 a tonne, said traders.

 

'No offers are coming from Thailand or Pakistan. Sales have not been happening for the past four days. For consignments in transit, prices have been raised by $50-100 and renegotiated,' said a trade source from Bangkok, on the condition of anonymity. 

 

Prices of consignments on sail are being raised with traders taking the risk of even cancelling it, said an Indian trader. 

 

Frantic calls from Gulf

'There are frantic calls from the Gulf seeking supplies of Sona Masuri or Ponni rice. They are enquiring as far as Singapore as traders there usually have six months stock. This means these rice varieties are commanding prices at par with Basmati,' said another trader.

 

This is because many Indian non-residents, especially from South India, rely on these varieties for their daily consumption. 'The rice market has become precarious. Almost all traders are in a wait and watch mode but towards the middle of the week, we could see a significant rise in prices. Already, some varieties are quoted at $600 a tonne,' sadi VR Vidya Sagar, Director, Bulk Logix. 

 

The rice market is in turmoil after July 20 when India banned exports of white rice that makes up 40 per cent of its annual 17.5 million tonnes (mt) non-Basmati rice shipments. It has led to fears that the move could result in global food inflation with wheat prices rising after Russia backed out of the Black Sea Grain Initiative. The initiative ensure Ukraine wheat, sunflower and corn reached nations that depended on Kyiv supplies.

 

Resons for ban

The Indian government’s decision to ban white rice shipments came after the progress in the sowing of paddy was tardy. Though the acreage has turned positive, the Centre is wary about the damage caused by floods in rice-growing regions of Punjab and Haryana. 

 

In addition, its rice stocks have dropped to a six-year low with the Centre supplying rice instead of wheat to the poor through ration shops and rates of the cereal in the global market soaring to a five-year high. 

 

Research agency BMI, a unit of Fitch Solutions, said the Indian government’s decision to promptly ban white rice exports was the rise in food inflation during June.   

 

Besides these factors, Thailand has said its rice production could be lower by 6 per cent this year due to the El Nino weather phenomenon affecting its paddy. Vietnam’s paddy crop will likely be hit by the weather factor, resulting in rice stocks being at a historic low, a Delhi-based analyst  said. 

 

Vietnam courts more buyers

'Most buyers are queuing up before Vietnam, whose offerings are lower than Thailand. Traders say it has received 20 per cent additional enquiries,' said S Chandrasekharan, a New Delhi based trade analyst.

 

Vietnam is not committing itself as it is getting ready to conclude a 'big' deal with the Philippines. Hanoi will supply Manila an assured quantity to ensure its food security.

 

In return for this, Vietnam will access the Philippines market for its fruits, Chandrasekaran said. 

 

On the other hand, China has begun to aggressively scout for rice and this would put additional pressure on the market, Chandrasekaran said. 

 

Neighbouring Bangladesh has only 2 mt of rice stock and it has begun speeding up its purchases. 'Though it needs parboiled rice only, its prices are rising after the Indian ban on white rice since some buyers are seeing it as an alternative,' he said. 

There is an increased demand for Kashmiri vegetables across different markets in the country and exports have increased as compared to the previous years.

Due to the floods that have hit northern India, there has been an increased demand for Kashmir vegetables outside the Union Territory and consequently soaring prices in the local market.

Director Agriculture Kashmir, Chowdhary Mohammad Iqbal said there is a huge demand for the local Kashmir vegetables in the country.

On Monday, some 30-40 trucks of vegetables were exported from Jammu and Kashmir and the vegetables are fetching good prices and farmers are also happy.   

'Out of 2,16,785 Metric Tonnes of vegetables grown between June and July, more than 80,719 Metric Tonnes were exported,' the director said.

He said despite the challenges on Srinagar-Jammu highway which poses a challenge in export they have been able to send 100MT of vegetables this week only.

The agriculture department expects to produce 2,42,000 MT of vegetables in the month of August which add to the economy of the farmers.

'This year there is sustainability among the people for the crops. Although there are rains, that would not affect paddy or vegetable crops. However, sometimes rains delays maturity in vegetables,' he said.    

The director also said this year some 32,000 metric tonnes of garlic was exported from Kulgam and Shopian districts of south Kashmir alone.

A newly formed India-Australia joint working group is looking at the possibility of a mutual recognition agreement (MRA) that would help Indian whiskey makers tap into the Australian market, which has a significant Indian population and growth opportunity, two people aware of the development said.

 

India and Australia are working together on a solution for the smoother entry of Indian whiskey to the Australian market, two people aware of the development said. A newly formed India-Australia joint working group is considering the possibility of a mutual recognition agreement (MRA) in this respect.

 

Under Australia’s rules, the spirit must be matured for two years before it can be labelled whiskey, a disadvantage for potential liquor exporters from India, which has no such rule. Indian companies claim that spirits mature quicker in India due to its warmer climate, and the maturation rule limits access in a market which has a significant Indian population offering good growth opportunities. They claim that a two-year maturation in India will also cause a 10% loss due to evaporation.

 

'There is a difference in maturation rate for whiskey that both countries follow, and that is an obstacle in trade. A joint working group has been formed to look into the issue and find a way out. Several stakeholders are part of the committee, including the ministry of food processing industries that is looking into the matter,' one of the two people said, requesting anonymity.

 

The group’s formation comes seven months after Australia gained concessional duty access for its high-end wines under the India-Australia interim trade deal called Economic Cooperation and Partnership Agreement (ECTA) that took effect on 29 December.

 

The Indian liquor industry is pushing for similar relaxations in the UK as well, where the minimum maturation period is three years.

 

India is particularly interested in market access for rum and whiskey, said an industry executive, the second person cited above. 'It may be difficult for Australia to amend their maturation rule, but maturation equivalency is proved in the Indian climate. An MRA could be a solution. Easing of maturation rules in the UK, Canada, and Australia can open up big markets for our producers because there is a significant Indian diaspora in all these countries,' the person added.

 

The formation of the working group comes after India, for the first time ever, opened up its alcoholic beverage market for foreign players under a free trade agreement with Australia last year. While large foreign firms are keen on access to India’s fast-growing whiskey and wine market, the Indian liquor industry, too, wants a relaxation in non-tariff barriers such as the maturation rules.

 

According to a side letter of ECTA signed by the trade ministers of India and Australia last year, market access for Indian spirits and whisky will be examined by a working group, which shall meet within six months of the agreement coming into force. 'The parties shall consider issues relating to market access, including maturation rules for whisky and other alcoholic beverages…Both parties shall regularly review the progress of the working group through the subcommittee on trade in goods,' it said.

 

The 'Australian rule requiring minimum maturation of two years for whiskey and one year for rum is a big hurdle that denies the majority of Indian liquor products access to the Australian market. We believe that these are legacy regulations, not backed up by scientific facts, and not relevant for products made in India where climatic conditions lead to a much more rapid maturation,' said Vinod Giri, director-general of the Confederation of Indian Alcoholic Beverage Companies (CIABC). These matters could not be concluded in the early harvest deal in the absence of time needed for due process but were acknowledged as outstanding issues to be resolved through a working group later, he said.

 

According to CIABC, India is fast emerging as a producer of high-quality liquor, including single malt whiskies like Amrut, Rampur and Indian craft gin like Jaisalmer, Terai, Stranger & Sons, etc.

 

'We are happy to note the rolling out of the JWG and look forward to an educated dialogue and fact-based review of such regulations and also of any other similar matter which restricts the two countries from maximizing the benefits out of the FTA. We will, of course, be glad to assist in whichever manner our Government deems appropriate,' said Giri.

 

Queries sent to the commerce ministry and the Australian High Commission in India remained unanswered.A 2021 survey by the Indian Council for Research on International Economic Relations (ICRIER) and PLR Chambers showed that over 70% of the growth in alcoholic beverage consumption in India in the next decade will be driven by the lower middle and upper middle-income groups and 26% consumers are estimated to move to higher brands by 2030.

 

Under the trade pact with Australia, India allowed tariffs on wine from Australia with a minimum import price of $5 per bottle to be reduced from 150% to 100% on the deal’s implementation and subsequently to 50% over 10 years. The duty on bottles with a minimum import price of $15 was reduced from 150% to 75% on deal implementation and subsequently to 25% over 10 years.

India's contracting exports have prompted the government to introduce incentives for startups and new exporters, and relax compliance norms for the existing exporters.

 

Under the Market Access Initiatives (MAI) Scheme, startups and new exporters have been made eligible for airfare reimbursement to participate in overseas events while the ceiling for this incentive for existing exporters has been raised 20%.

 

India's goods exports shrank the most in three years, at 22% on-year, in June to $32.97 billion. Under the scheme, financial assistance is provided for export promotion activities.

 

Earlier, new exporters and startups didn't get such incentives but now those with Rs 50 lakh annual turnover in the domestic market will get some support.

 

The benefits of higher airfare reimbursements will also apply to the exporters when they host foreign buyers in reverse buyer-seller meets in India.

 

'Incentives are important as mega trade fairs are being thought of and there is a need to scale up our exhibitions and invite foreign companies to exhibit here,' said an official.

 

India plans mega trade fairs for food, textiles and auto components, on the lines of Messe Frankfurt, Gulf Food and Canton Fair, to achieve 12% growth in good exports by 2030.

 

'The coverage of new entrepreneurs with nil exports for airfare support under the scheme is well conceived and pragmatic to encourage startups to enter into exports field particularly as we are looking towards a $1 trillion exports by 2030,' said Ajay Sahai, director general, Federation of Indian Export Organisations (FIEO).

 

Benefits under the MAI scheme are availed through activities organised by the government, states, export promotion councils and commodity boards, among others.

The food authority has issued an order, in this regard, saying that all laboratories already notified by FSSAI, which have not obtained FSSAI-NABL (National Accreditation Board for Testing & Calibration Laboratories) integrated assessment accreditation, must obtain the same prior to the expiry of their NABL accreditation validity period or before March 31, 2024, whichever is earlier.  

 

According to the food authority, FSSAI will only accept fresh proposals from laboratories for FSSAI recognition and notification if the laboratory has obtained accreditation under FSSAI-NABL integrated assessment scheme.

 

And such labs should get FSSAI-NABL integrated assessment on or before March 31, 2024.  

 

In 2019, FSSAI issued a notice, in this regard, asking all the notified laboratories to get integrated assessment for accreditation under FSSAI-NABL unified approach of laboratory accreditation/recognition/approval system which also has other regulatory boards.  

 

And, accordingly, the food testing labs willing to apply for FSSAI recognition/ renewal/extension of scope and so on were asked to apply only through the unified system of integrated assessment.  

 

Subsequently, in September 2022, the date for such integrated assessment was extended until June 30, 2023.  

 

This will be the third time FSSAI extended the timeline.