Rice traders in India have ceased signing new export contracts, industry officials said. This comes amid labor shortages and supply disruptions due to the nationwide lockdown, which has also hampered the delivery of existing contracts. Traders said that 1,00,000 tonnes of basmati and 4,00,000 tonnes of non-basmati rice, meant for March-April delivery, was stuck.
The halt in exports from the world’s biggest exporter is allowing rival countries such as Thailand to raise shipments in the short term and lift global prices, forcing millions of poor consumers in Africa to pay higher prices.
“Shipments have stalled as transport has become very difficult because of the lockdown. Drivers are not coming and labor is not available at mills and ports,” said B.V. Krishna Rao, president of the Rice Exporters Association (REA).
Before the lockdown, India was offering a 5% broken parboiled variety at around $365 per tonne free-on-board basis. Thailand is now been offering the same grade at around $540 per tonne.
“After the lockdown, there will be a huge demand for Indian rice, as India is in a sweet spot in terms of offering competitive prices,” said Olam’s Gupta.
Since India has vast surplus stocks, it could start cashing in on-demand once labor shortages ease, said REA’s Rao.
India’s rice exports in 2019 fell 18.1% from a year earlier to 9.87 million tonnes, the lowest in eight years, as demand moderated from key Asian and African buyers.