About a third of India’s rice exports for January are unable to move due to a freight train shortage, and most traders have avoided signing February export contracts to avoid demurrage penalties. Due to the slowing of exports, the Indian government may be forced to expand its procurement from farmers.
A scarcity of freight trains caused shipments of more than 500 000 tonnes of non-basmati rice from the central state of Chhattisgarh to ports on India’s east coast to be stalled, according to dealers who spoke to BusinessDay. They are part of India’s projected shipment of 1.5 million tonnes of rice in January.
Due to a slowdown in India’s rice exports, competing suppliers such as Thailand, Myanmar and Vietnam have been able to increase global sales at higher prices.
“Cargoes cannot move from producing centres to ports because of freight train scarcity,” said Nitin Gupta, vice president of agricultural commodities trader Olam India to the Economic Times.
“There is no clarity on the availability of trains, so nobody is offering fresh cargoes.”Nitin Gupta
After power plants ran out of coal a few months ago, railway authorities redirected carriages to export fertilisers and serve thermal coal power stations to assure enough electricity supply for winter. To meet greater demurrage charges, traders have begun asking higher rates for international exports, and prices for India’s 5% broken parboiled kind of rice have jumped to $380 per tonne, the highest in six months.
In the past, when railway wagons were unavailable, traders would turn to road transport, but truckers have significantly increased freight charges in the last six months as diesel prices reached new highs.
According to interim official figures by Reuters, India captured over half of worldwide rice shipments in 2021, with exports rising by 45% from 2020 to a record 21.4 million tonnes, or more than the combined exports of the next three major exporters, Thailand, Vietnam and Pakistan.