India could grab a big chunk in global exports of wheat and rice

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India could grab a big chunk in global exports of wheat and rice


Indian wheat and rice exports are growing at a surprising pace, wheat exports are said to quadruple to reach the highest level in 8 years. India is the second biggest producer of wheat in the world, industry is expecting India’s wheat export figure to rise more than 4 million tonnes.

Indian rice exports are also expected to account for as much as 45% of global rice exports in 2021, and it could export around 22 million of rice this year, which is said to be more than combined exports of other three largest exporter countries like Thailand, Vietnam and Pakistan.

The Rise in exports is due to a combination of many factors –

  • Good Demand for Indian Wheat and Rice – Indian Wheat has a good demand across global markets for human consumption and for feed purposes as well. Indian wheat has a good demand from countries like Bangladesh Sri Lanka, Indonesia, Nepal and the United Arab Emirates. There is a growing demand for rice from Asian countries. India's exports of non-basmati rice go mainly to African and Asian countries, while premium basmati rice goes to the Middle East, the United States and Britain.
  • Rally in global prices – Due to limited supplies from major exporters like Russia and Canada there is a rise in global prices of grains. The rise in global prices has lead to manufacturers from Asian countries who required wheat and rice as raw material for their factories  to opt for cheaper and good quality Indian rice and wheat, traditionally Indian basmati rice only had a huge demand for exports but now even exports for non basmati rice is rising. For Example, two cargoes of around 100,000 tonnes of Indian wheat were sold to flour millers in Indonesia, while one cargo of about 50,000 tonnes was bought by feed makers in the Philippines.  A surge in exports has lifted Indian prices to $305 per tonne on a free-on-board (FOB) basis, compared to $260 three months back.
  • Asian Buyers saving in shipping cost – While Indian wheat and rice are cheaper in value, for asian countries, they are also saving in shipping cost where traditionally Asian buyers used to spend 10$ to 15$ more when they used to import from Russia and Ukraine, which shows that on C&F (cost and freight) basis Indian wheat is competitive in the Asian market.
  • India harvested a record 109.52 million tonnes of wheat in 2021 and state-run agencies are holding a record 51.8 million tonnes, more than double the required buffer norm.

What are the problems India facing while trying to grab a chunk of global exports?

Logistical Bottleneck -

India’s main rice port Kakinada Anchorage has limited infrastructure which has led to persistent congestion and lengthy loading delays, prompting some buyers to switch suppliers. India was offering a discount of more than $100 per tonne over other exporters, but much of the discount was wiped out by higher demurrage charges due to the delays.

The state of Andhra-Pradesh allowed the use of an adjoining deepwater port at Kakinada for rice shipments to ease the congestion, due to this vessel waiting period has gone down which has led to uplift in demand which could have been fulfilled by other countries but has remained with us.

Serious need for upgrade of Infrastructure -

The Kakinada port even after having extra port capacity still lacks behind Southeast Asian Ports due to a lack of dedicated rice and wheat handling infrastructure. Exporters complain that it takes nearly a month to load around 33000 tonnes of rice from the time they drop it at the port, while in Thailand it takes around 11 Days for the same quantity. If the ports Infrastructure was upgraded and the process was mechanized, India could export 2 million tonnes of additional rice.

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