Shortage of Freight Stopping the Rice Export Deals

Shortage of Freight Stopping the Rice Export Deals

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India is the largest rice exporter as per the latest statistics in 2020-21. But, in light of the latest happenings, this can change significantly in the upcoming months. Recently it is seen that the train freights are getting stuck and rerouted. It has caused a lack of freight carriers for transporting the rice from the suppliers to the exporters at the ports. This is compelling some roadblocks in the export businesses and also for farmers.

Rice export from India

As mentioned, India is the largest rice exporter for the rest of the world. This is because of the paddy-friendly soil and climate, that makes it easy to grow the best non-basmati and basmati rice. Basmati rice remains one of the biggest exports in the rice category. Types like taraori basmati, basmati type 3, basmati- 370, etc., are majorly exported. Other than this, various other non-basmati rice types are exported. This includes milled, boiled, sella, etc. other than these categories, ponni, and katarni rice varieties are also exported. There are several high-end rice manufacturing companies like SSI basmati Rice Company that export rice.

Rice is exported to various countries on different continents. But some of them are the biggest buyers like Saudi Arabia, Kuwait, UAE, Iran, Iraq, Canada, USA, UK, Oman, etc. Among the latest importers of rice from India in Latin America. Three Asian countries are the biggest competitors of India when it comes to rice export; Myanmar, Thailand, and Vietnam.

Freight shortage

In the last few months, the country has seen some major coal scarcity. The scarcity got so bad that the railway ministry had to deviate the freight carriages to bring coal to the power plants. Lack of freight trains has stopped the transport of rice from the production centers to the ports. From Chhattisgarh itself, 500,000 tonnes of rice, is to be transported to the east coast ports. These shortages of trains can actually be a roadblock to the export estimate of 1.5 million ones from various parts of India.

Also, in the past, many transporters and suppliers like SSI basmati moved by road if there was a dearth of freight. But as India saw a hike in petrol and diesel price, this route has also stalled due to increased transportation prices.

Increased rice price

As the trains are not available and the rice cannot reach the ports, the exporters are levied with demurrage costs. The price of carriers has increased significantly to $30,000/day, and some exporters are paying as high as $500,000 for demurrage costs. This is hitting them heavily. This is because the demurrage cost is eating into their margin completely, leaving them with