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APEDA steps in to help agri exporters in resolving railway rake shortage issue.
Jan 20, 2022

The Agricultural and Processed Food Products Export Development Authority (APEDA) has stepped in to help exporters of agricultural products in solving the issue of a shortage of rail rakes, but the situation is likely to be tight for some more time.

APEDA is following up the issue continuously with the Railways Ministry after the issue was brought to its notice, though some exporters of rice and sugar are moving their consignments by trucks to ports due to a lack of other options.

The shortage of rakes cropped up as the Railways is giving priority to move coal and fertiliser. Also, priority is accorded to the movement of foodgrains meant for public distribution by the government on fears that the spread of the Omicron variant of Coronavirus could result in shutdowns.

Stark situation

'The situation is in contrast to what happened three months ago when Railways allowed us to load in 21-box rakes than the usual 42-box rakes. Now, you have demand from coal, fertilisers, foodgrains, cement and other such sectors,' said BV Krishna Rao, President, The Rice Exporters Association (TREA).

Besides looking at options such as transporting export consignments by road, exporters are also looking at nearby destinations for shipments as it will help them overcome the problem of lower margins, said VR Sagar, Director, Bulk Logix.

APEDA Chairman M Angamuthu, when contacted, told BusinessLine that his office held a meeting with TREA, which had complained of the non-availability of rakes affecting the export of non-Basmati rice from Chhattisgarh over the past month.

'APEDA had a meeting with the TREA for taking stock of the situation and the difficulties faced. The traders informed that they are not able to get the required number of rakes on a daily basis and as a result, they are not able to get a sufficient quantity of rice for fulfilling their committed orders,' he said.

The traders also highlighted the issues related to infrastructure at the railway stations, he said.

Railways’ assurance

Following this, APEDA organised a video conference of TREA representatives with the Railways Ministry in which the trade difficulties were explained. 'The Railways Ministry was requested to resolve the current issue of insufficient availability of rakes on a priority basis so that the export is not affected. Railways officials said due to increased movement of fertilizers and coal that in demand, this problem is taking place,' the APEDA Chairman said.

Railways officials have assured to resolve the issue as per the availability of resources even as APEDA is following it up, he said.

Bulk Logix’s Sagar said with crude oil prices increasing, moving shipments by road was proving to be costly.

'Moving consignments by rail is cheaper, but rakes will have to be available. We have no other option than road now,' he said.

'For rice, road transportation is not possible given the volume of the consignments,' said TREA’s Rao.

Risks of losing money

Shippers are facing problems in moving consignments from Chhattisgarh and Karnataka. 'Our contracts are time-bound. For example, we have to deposit a certain amount of money to sugar mills in Karnataka when we sign deals to buy sugar. If we don’t move them by the stipulated time, we will end up losing our money,' Sagar said.

Trade analysts said practically, no rakes were available over the past fortnight. Exporters are facing transportation bottlenecks mainly in Chhattisgarh, Karnataka and Maharashtra.

'There are some 5,000 rakes available in the country. But besides coal and fertilisers, priority is for the Food Corporation of India to move its stocks as planned,' said an analyst.

Though the private sector has rakes, they are not available, the analyst said. Sagar concurred with the view on the availability of private sector rakes.

Threat of business shifting

Rao said the non-availability of rakes could force rice buyers to shift to other exporters such as Thailand and Vietnam. 'We cannot allow our business to shift to other countries. It will cost us additional money to bring them back,' he said.

'We are even planning to load in open wagons, though we will not get insurance cover,' the TREA President said.

The Bulk Logix director said exporters were signing new deals despite the problems.

'Even yesterday, we signed deals to export sugar to Djibouti. We have got deals to export white rice, parboiled rice and even wheat flour,' he said, adding that shippers are having to settle for a lower margin of 1-2 per cent.

'For many rice exporters, moving by road will not get them any margin,' Rao said.

'The wise thing would be to export to destinations such as Djibouti rather than any West African ports. It takes 10 days to send consignments to Djibouti and 45 days to West Africa,' Bulk Logix’s Sagar said.

By shipping to Djibouti, the gateway to reach countries such as Ethiopia, exporters can complete two cycles of shipments compared with sending consignments to West African ports. 'So, even if we settle for a lower margin, we can gain by doing these short duration destinations,' Sagar said.

Though sugar exports are facing a hurdle in view of the non-availability of rakes, exporters have actually slowed signing new deals as global raw sugar prices dropped below 19 US cents a pound (?31,500 a tonne) after having ruled above 20 US cents a few weeks ago. White sugar prices, too, have dropped to $509.10 a tonne.

According to the Indian Sugar Mills Association, sugar exports have increased by 277 per cent during the first three months of the current season that began on October 1, 2021.

Rice exports during the April-October period of the current fiscal have increased to 9.63 million tonnes against 6.17 million tonnes in the year-ago period as neighbouring countries have found it competitive to import from India.

Currently, rice exports are under pressure since the Centre’s procurement of parboiled rice has resulted in the rates for shipments rising by $20-30 a tonne.

Trade analysts see the rail rakes problem as a temporary blip that could be set right soon.

'We are told the problem could continue till March, but some concessions in allotment of rakes are needed for rice, lest we lose our market share,' Rao said.

thehindubusinessline

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