Rice prices on the world market have started to rise after falling by more than 10 percent. Yet, Pakistan offers tough competition to India with its competitive prices.
“Rice prices are rising as they had fallen significantly. They have run out because Ramadan is approaching and the harvest has been postponed,” said BV Krishna Rao, chairman of the Rice Exporters Association (TREA).
“After India lifted restrictions on rice exports, other countries like Pakistan and Thailand cut prices by 10 to 15 percent,” said Delhi-based exporter Rajesh Jain Paharia.
“Rice prices are recovering thanks to good demand from the Philippines, where buyers are looking for the new crop. Far Eastern countries are buying good volumes,” said Rajathi Group Director M Madan Prakash.
Pakistan’s advantage
According to the Thai Rice Exporters Association, Thailand charges $516 per ton for 5 percent broken white rice, while Vietnam offers $520-$524 and Pakistan $455-$459. The Indian price is $453-$457. Prices have increased by $10 in the past two weeks.
“The new rice is being offered at $460 per tonne, free on board,” said Prakash, who is also a former chairman of the Agri Commodities Exporters Association (ACEA).
“The problem for India is that freight rates from Pakistan are lower compared to India. Due to the high import from China, freight costs from Pakistan are lower. For example, from Karachi to Port Louis in Mauritius it costs $45 per container, while from Mundra to the same port it costs $90,” said Jain.
“One advantage for Pakistan is that the value of the rupee is lower than that of India. Pakistan can offer only limited competition to India, although exporters have been aggressive in the market of late, says New Delhi-based trade expert S. Chandrasekaran.
Draining empty containers
The Pakistani rupee is valued at 0.0036 against the dollar, while the value of the Indian rupee is 0.012 against the dollar.
“Pakistan has good relations with China compared to India. That is why they are importing huge amounts of goods from Beijing,” the expert said.
Data shows that Karachi processes 1.97 million containers annually and returns around one million containers empty.
“It makes sense to use empty containers. It is better to offer low freight rates than to leave it empty,” said the trade expert.
Despite fierce competition, India exports 1 to 1.3 million tonnes of rice per month, especially after transport restrictions are lifted, TREA’s Rao said.
Quality problems with Pak
“Some buyers, especially in the Philippines, are reporting quality issues with Pakistani rice. They complain that the whiteness of the rice is not at the desired level while the moisture content seems a bit high,” said a trader without asking to be identified.
India has restricted rice exports from September 2022, when it banned the shipment of broken rice and imposed a 20 percent duty on milled rice. In July 2023, it banned the export of milled rice and imposed a 20 percent duty on pre-cooked shipments. It also fixed $950/ton as the minimum export price for basmati.
The restrictions were imposed to control food inflation, especially as the country’s rice-growing areas faced a shortage of rainfall in 2022. Last year, El Nino caused a quarter of the country to suffer from drought.
Despite the weather conditions, India produced 135.75 tonnes in the 2022-23 crop year and 137.82 tonnes in 2023-24 – both record highs. This year, Kharif rice production is estimated at 119.93 million tonnes.
With rice stocks in warehouses overflowing, India eased restrictions in September. However, the ban on the export of cracked rice remains, with India using the cracked grains for ethanol production.
