“Global rice prices could move upwards in coming months”
Nathi Ram Gupta, Chairman, AIREA, feels that while food security may not be an issue globally, rise in border closures, quarantines and market & trade disruptions could impact access to food in importing countries.
TPCI: There has been a surge in demand of food products across the world, particularly due to expectations of shortages among importing countries. What business opportunities are coming up for Indian rice exporters in this situation and in which markets?
Nathi Ram Gupta: According to FAO there is no panic situation as food security is not an issue. Yet the question today is that border closures, quarantines and market and trade disruptions in various countries could impact people’s access to food, especially in countries hard hit by the virus. But as far as non-basmati rice is concerned, Thailand’s high prices are affecting its supplies to major destinations like China and Africa. Africa, in particular, could open up a vast opportunity for Indian rice. Opportunity will also come from other countries, which are import dependent.
TPCI: What are the most critical operational and logistical challenges that the rice industry is facing as a result of the ongoing lockdown in India?
Nathi Ram Gupta: There are several. Due to lockdown there is reduced activity in term of mill operations, transportation, etc. This is because of shortage of labour who have migrated to their domicile states due to the scare of Covid-19. Almost 90% of trucks are still as there are restrictions on movement through various states, primarily because of interpretational aspect of the guidelines. The other challenges are lack of inspection and testing facilities , certification procedure, non- operation of downstream industry such as packaging units, etc. Non-availability of courier services is another bottleneck.
TPCI: What impact is the situation expected to have on rice business for the entire year 2020?
Nathi Ram Gupta: Since the lockdown commenced in third week of March, the business activity has equally slowed down. Now that the lockdown period has been extended by another 19 days, the recession in the rice industry will also continue. As for exports, the actual impact will be visible from now on. Though demand will continue from overseas, many countries are implementing higher controls on cargo vessels, with the risk of jeopardizing shipping activities. Also measures affecting the free movement of people, such as seasonal workers, might have an impact on food production, thus affecting market prices globally.
TPCI: How is the industry managing operations to minimise the damage while ensuring health and safety of personnel?
Nathi Ram Gupta: See the industry is currently not running full stream, because
(a) Government guidelines permit only 50% of manpower and
(b) Labour availability is in short supply in any case.
Even after lockdown is lifted, it is anticipated that industry will take almost one and a half months at least to start full-fledged operations; provided all downstream industry operations and logistics systems also start functioning full stretched.
As for health and safety of personnel, the industry has taken proactive steps by introducing thermal scanning and thorough screening of the health of personnel entering the unit . And as a regular practice personnel are working with aprons, caps, gloves on to avoid risking contamination.
TPCI: What measures can the government take to ease the situation for the rice industry in your view?
Nathi Ram Gupta: Government is also doing its bit in the larger interest of protection of human health of masses. But industry expects Government to provide some relief in terms of waiver of interest on commercial borrowings for the lockdown period, extending financial support by way of MEIS and Interest Equalization to rice industry as a whole along with extending the benefit of Transport and Marketing Assistance scheme.
TPCI: How do you view the impact of the Covid-19 situation on the global rice trade over the next few years? How would the Indian rice industry need to adapt?
Nathi Ram Gupta: Due to Covid-19 , USDA has estimated global rice trade to be 3 million tonnes shorter than last year. Apart from Covid-19, droughts in Australia and Thailand and rising world market prices contribute to this drop. Vietnam, the world’s third largest exporter of rice, is limiting rice shipments for April and May. Cambodia and Myanmar have imposed temporary export bans. These moves by countries are likely to move prices upwards and limit trade.
However, the incidents of the next couple of months will further define food trade in general and rice trade in particular, because rice is a staple of 2/3rd of world population.
The Indian rice industry will be adopting a wait and watch policy and explore the opportunities that may come by.