Rice Export by RushenChahal

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									Salient Features of the International
Rice Market
   Trade of Residual Supply
    - Govt. in most rice growing countries protect
    both consumers and farmers from price
    variation by maintaining non- price barriers
    between domestic and international markets
   As a result, international trade in rice has
    become a function of excess domestic supply
    over demand
   The trade is not much responsive to world
    prices.

                     Prof. Rushen Chahal
Salient Features of the
International Rice Market
   Thin International Market
    - world rice market is thin in relation to
    world production
    - Less than 5 percent of annual rice
    production is traded internationally.
    - Bulk of rice production occurs in the
    Asian countries which are also major
    rice consumers

                    Prof. Rushen Chahal
Salient Features of the
International Rice Market
   High price volatility
    - Thinness of the international market
    leads to increased price volatility
    - It creates added incentives for self
    sufficiency in rice, further thinning the
    market


                    Prof. Rushen Chahal
Salient Features of the
International Rice Market
   High search and transaction cost
    - fluctuation in the participants’ share in
    the market
    - absence of fixed trade channel leads
    to high search and transaction cost
    - Each decision to enter the market
    generally requires a new search for
    trading partner.

                    Prof. Rushen Chahal
Salient Features of the
International Rice Market
   Non-homogenous commodity
    - different varieties and grades are
    preferred by different consumers
    - Many attributes influence the value of
    the produce resulting in large price
    differentials among different grades


                   Prof. Rushen Chahal
Indicators of global competitiveness
   Basmati rice
   Location: karnal, Haryana
   Exported from kandla port
   NPC = 0.89
   EPC = 0.88
   ESC = 0.74
   DRCR = 0.48
   Although basmati rice is sufficiently price
    competitive, India has failed to perform
    sufficiently well in rice trade
                      Prof. Rushen Chahal
Perspective on rice exports
   Supply constraints
    - Need to augment production of basmati rice
    - Backward and forward linkages to farmers
   Procurement constraints
    - Lack of requisite statistics for purchase
    planning by the exporters
    - High incidence of local taxes/charges


                    Prof. Rushen Chahal
Perspective on rice exports
   Processing constraints
    - Excessive investment in rice milling capacity
    - milling capacity of 286 million tons of paddy
    against production of about 120 million tons.
    - low cost of installation and replacement of
    rice huller
    - low capacity utilization (180-220 days in a
    year)

                     Prof. Rushen Chahal
Perspective on rice exports
   Low incidence of modern rice mills
   Levy disincentives to exporting rice mills
    - most exporters are merely traders instead
    of processor-cum-exporter
   Exporter pre-qualification is absent
    - only registration with APEDA
    - most rice traders are fly-by-night operators,
    striving to maximize short term gains

                     Prof. Rushen Chahal

								
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