Shipment term

Paddy prices set to drop after India clears shipment

Traders expect paddy prices to cool after India allowed 600,000 tonnes of duty-free shipment of paddy to Nepal as the market has been on the rise since the southern neighbor announced imposed export restrictions almost two months ago.

On September 9India, the world’s largest grain exporter, has banned exports of broken rice and imposed a customs duty of 20% on various types of rice, with the exception of parboiled rice and basmati rice. The move was aimed at boosting supply and calming prices after below-average monsoon rains reduced plantings.

The repercussions were felt immediately in Nepal. Retailers say the price of imported long rice and fine rice saw the biggest jump of 10 rupees per kg.

Market insiders said the more expensive rice would affect household budgets and the poor, in particular, would struggle.

The paddy crop in Nepal is expected to fall, which will lead to increased pressure on prices in the coming months. During the last fiscal year, Nepal’s paddy crop fell to 5.13 million tonnes, its lowest level in five years, due to unseasonal rains in October.

Paddy is the most remunerative agricultural product in Nepal, tens of thousands of farmers depend on it for their livelihood.

Nepalese traders are delighted that the Indian government has lifted the restrictions.

“The latest move by the Indian government has been a respite,” said Deepak Kumar Poudyal, secretary general of the Nepalese Rice, Oil and Pulse Industry Association. “It will also help other industries that depend on the by-product of the rice industry to continue their operations.”

Although it is the harvest season, the price of paddy has increased by Rs 10 per kg compared to last year, according to Poudyal. “The price of paddy went from Rs 2,700 per quintal to Rs 3,700 after India imposed restrictions.”

According to the association, a Nepalese delegation had pleaded with the Indian government over the export tax when Nepalese agricultural production was supposed to fall.

Experts say the paddy crop in Nepal is likely to drop in the current fiscal year due to a shortage of chemical fertilizers during the paddy transplanting period in June-July.

A drought-like situation then hit the main food producing districts.

In August, a heat wave spread over most of the southern Tarai, the country’s food basket, which scorched summer crops, especially paddy, in the fields.

Rice prices started to rise sharply following India’s decision in early September. The export restrictions have also posed an existential threat to hundreds of rice mills across Nepal.

Subodh Kumar Gupta, chairman of the Nepalese Rice, Oil and Pulses Industry Association, told the Post in September that there were 2,500 rice mills, large and small, operating in the country, employing 50,000 people.

Rice is the staple food of the Nepalese people and the domestic production is sufficient to feed the population, but the demand for long and fine grain rice varieties has increased in Nepal and is being met by India.

During the last fiscal year, Nepal imported 550,000 tons of paddy, 520,000 tons of rice and 50,000 tons of broken rice, mostly from India, according to the Customs Department.

In terms of value, rice and paddy imports were worth Rs 29 billion and Rs 16.99 billion respectively.

In the first three months of the current fiscal year, rice and paddy imports amounted to Rs 5.3 billion.

India also said it would allow overseas shipments of white and brown rice shipments secured by letters of credit issued before September 9, a move that relieves exporters struggling with new government restrictions. according reports.

Indian exporters have been unable to transport nearly a million tonnes of rice, which was in transit before the Indian government issued the ban, according to media reports.

India exports rice to more than 150 countries, and any reduction in its shipments would increase upward pressure on food prices, which are already rising due to drought, heat waves and the Russian invasion. from Ukraine.

Nepal’s consumer price index reached a 74 months high in September. The rise in prices in September more than doubled to 8.64% from 3.49% in the same month last year, according to the Nepal Rastra Bank.

Reports indicate that heatwaves have hit most countries around the world and global production will decline this year, fueling inflation and food insecurity in low-income countries like Nepal.

Experts say Nepal needs to look for alternative sources for its rice needs like Thailand, Myanmar, Cambodia, Malaysia and other rice producing countries.