Business Other News 01 Feb 2016 India set to ink Rs ...

India set to ink Rs 3,000cr rice export deal with Indonesia

FINANCIAL CHRONICLE
Published Feb 1, 2016, 11:06 am IST
Updated Feb 1, 2016, 11:06 am IST
India may soon close a deal to sell 1 million tonne of rice worth about Rs 3,000 crore with Indonesia
India had more than 26 million tonnes of rice in the central pool as of January 1, against 7.61 million tonnes needed for mandatory buffer, including strategic reserves, official data show.
 India had more than 26 million tonnes of rice in the central pool as of January 1, against 7.61 million tonnes needed for mandatory buffer, including strategic reserves, official data show.

India may soon close a deal to sell 1 million tonne of rice worth about Rs 3,000 crore with Indonesia, which will be the first major shipment from government’s stocks in the past 12 years, as the south-east Asian country looks to bolster availability.

Though Indonesia asked for supplies between 1.5 million tonne and 2 million tonne, the government has agreed for 1 million tonne, sources said. In 2003-04, the country exported 27.75 lakh tonne of rice from the central pool stocks maintained by the Food Corporation of India (FCI). The shipments dropped to 65,000 tonne the following year, as the government decided not to export from official stocks.

 

The commerce and food ministries have agreed to the shipment, the sources said. Indonesia’s government-owned food procurement body Bulog will discuss detailed modalities with Ind­ia’s public sector trading company MMTC, sources said. MMTC will source the rice from FCI and sell to Bulog, sources added.

Reports suggest that Ind­o­nesia is trying to build stocks to hedge against lower output if rice crop fails in February and March due to El Nino-induced drought. The Indonesian government expects rice output to be over 47 million tonnes, while the US department of agriculture estimates it at 36.3 million tonnes in 2015-16.

 

Rice prices in Indonesia surged last year due to lower availability, forcing Jakarta to import about 1.5 million to­n­n­es. Of this, over 500,000 tonnes are yet to arrive.

India may sell the rice either at economic cost or procurement costs and freight, sources said. The economic cost of rice (of 2015-16 season) is Rs 32,580 per tonne for common variety and Rs 33,300 a tonne for higher grade, according to FCI.

India had more than 26 million tonnes of rice in the central pool as of January 1, against 7.61 million tonnes needed for mandatory buffer, including strategic reserves, official data show.

 

The current year’s rice stock is also about 3 million tonnes more than last year. The government expects that about 33.5 million ton­nes would be required for the public distribution system and other welfare sche­m­es while procurement mi­ght be 31 million tonnes in 2015-16 (Oct-Sept). Procurement of rice co­n­tinues all through the year.

Since procurement and release are an ongoing process, it is difficult to say how much the government would require until September, an official said. Some states do not lift the entire allocation and that is adjusted in the next allotment, the official said. India exported 90,245 tonnes of non-basmati rice in 2014-15, which was 25 per cent less than the previous year, according to the all-India rice exporters’ association data. Indonesia does not import basmati rice from India. Bilateral trade between India and Indonesia was valued at $19 billion in 2014-15.

 

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