Global Markets: Rice – India Raises Minimum Support Price for Paddy Rice

©Debra L Ferguson

This month, the Government of India announced a further increase to the Minimum Support Price (MSP) received by farmers for non-basmati rice. Over the past several years, the MSP has risen annually by about 4 or 5 percent. This year, the increase is 13 percent, from 15,500 rupees/ton ($240/ton) to 17,500 rupees/ton ($255/ton).

This is the most significant year-to-year increase in the MSP since 2012, when it rose by 16 percent. In recent years, the MSP for paddy has accounted for about 60 percent of the final average export price for milled nonbasmati rice.

India has been the top exporter of rice since 2012, when it returned to exporting non-basmati rice after a 4-year ban. Ample stocks and production enabled the country to ship competitively to markets around the world. This year the country is actively seeking out China as a new market to offset the recent reduction in import demand from Bangladesh and Sri Lanka.

The move to further increase the MSP could erode some of India’s competitiveness in 2019. India is still forecast as the top exporter, but others such as Thailand are expected to gain a competitive edge.

China Raises Non-Long-Grain Rice Tariff as Imports Soar

China, the top rice importing country in the world, has a tariff rate quota (TRQ) for 5.32 million tons, evenly divided with 2.66 million for both long grain and “other.” Historically, long-grain comprised the bulk of the official rice imports under the TRQ.

In 2017, however, China’s official import data showed the “other” category narrowly surpassing those of long-grain at just over 2.0 million tons. Interestingly, the subcategory of “other” that is rising the fastest is glutinous rice, especially from ASEAN countries.

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China’s official import data shows Vietnamese rice in the “other” category soaring from nearly nothing in 2011 to nearly 1.2 million tons for milled rice alone in 2017. Vietnam’s data shows this as a significant rise in glutinous exports.

Effective July 1, 2018, China modified its tariff schedule. The government raised the over-quota tariff for ASEAN countries for the “other” category from 5 to 50 percent, reducing the tariff advantage this Southeast Asian bloc previously had.

Full report.

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