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Rice exporters relieved as shortage of rail rakes begins to ease.
Feb 09, 2022

Rice exporters are heaving a sigh of relief as the shortage of rail rakes is getting resolved slowly, but they are now up against the huge backlogs that built up due to the non-availability of the rakes.

'The issue of rail rakes is much better now. But it has created a huge backlog in moving rice from Chhattisgarh to Andhra Pradesh. At least half a million tonnes (mt) conservatively could be pending,' said Nitin Gupta, Vice-President, Olam Agro India Ltd.

'Things are a little bit better now but we now face problems of container availability,' said Vidya Sagar VR, Director, Bulk Logix.

'The availability of rail rakes has improved. The situation is better than what it was a week or a month ago,' said BV Krishna Rao, President, The Rice Exporters Association (TREA).

Still bitter for sugar shippers

The shortage of rail rakes for exporters of agricultural products such as rice and sugar led to the Agricultural and Processed Food Products Export Development Authority (APEDA) stepping in to find a solution. It followed up on the issue continuously with the Railway Ministry after the issue was brought to its notice.

Sugar exporters say the problem of rakes shortage continues. 'Sugar mills in Maharashtra and Karnataka are facing the problem of railway wagons as sugar for export is mainly getting lifted from these States only,' said Praful Vithalani, President, All India Sugar Traders Association in a statement on Monday.

High freight rates

'We are in constant touch with the Railway Ministry and others stakeholders. The situation is improving and we are hoping for the best,' said M Angamuthu, APEDA Chairman.

The shortage resulted in rice exports slowing down a tad, though TREA’s Rao is confident that shipments during the current fiscal will be 16-17 mt of non-basmati rice, besides four mt of basmati.

Exports of non-basmati rice increased to 12.53 mt valued at $4.48 billion during the April-December period of the current fiscal compared with 8.25 mt valued at $3.07 billion during the same period a year ago.

'The container problem continues to affect exports. We have come to accept high freight rates as part of our challenges. Now with crude prices rising, freight rates are likely to rule firm,' said Rao.

Container availability issue

'The container availability is now an issue. With volumes building up, ocean freight is heading higher,' said Bulk Logix’s Sagar. For example, a ship with 7,000 20-foot equivalent unit containers collects $175,000 as the daily charge between the Far East and Europe.

'It will take time for the backlog to clear, but the situation is expected to become normal soon,' said Olam India’s Gupta.

Competitive offerings

Though breakbulk ships can be an option, there are some drawbacks to it, he said.

'It takes one month to fill up a ship with 50,00 tonnes capacity. Then, it will be between one month and 45 days before the consignment is delivered. It has to call at different ports and it could take up to 90 days for delivery. Breakbulk rates are also increasing,' Sagar said.

India’s rice exports have increased sharply since 2020-21 fiscal as neighbouring countries have found it more competitive. In addition, India gained from the drought that affected rice production in Thailand.

According to the International Grains Council, India’s 25 per cent broken white rice was quoted at $345 a tonne last weekend, while Thailand’s five per cent broken ruled at $414 and Vietnam’s five per cent broken at $388 a tonne.

Rice prices are down 13 per cent year-on-year for Indian exporters, while for Vietnam and Thailand they are lower by nearly 25 per cent.

A surge in corn prices resulted in China turning to India for broken rice. New Delhi faced no competition in the broken rice segment as the commodity was priced at around $300 a tonne.

Record output

Record rice production of 118.87 mt in 2019-20 and 122.27 mt last season (July-June) have helped the record shipments. During the current season, kharif rice production has been estimated by the Ministry of Agriculture and Farmers Welfare at a new high of 107.04 mt.

Record inventories with the Food Corporation of India also encouraged exports. As on April 1, 2020, FCI had 32.23 mt of rice, and 34.50 mt of paddy which is equal to 23.11 mt of rice. In April last year, the stocks dropped to 29.11 mt of rice and 31.06 mt of paddy (20.8 mt rice). As on January 1, FCI had 22.15 mt of rice and 47.36 mt of paddy (31.72 mt of rice).

The stocks are against a mandatory requirement for the FCI to have 5.61 mt of operational stock and a strategic reserve of 3 mt of rice as on January 1.

thehindubusinessline

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