Clarification on the import of 1 Million Tonnes of rice by Indonesia
Indonesia Trade Minister Zulkifli Hasan was quoted by Antara (The Indonesia News Agency) as saying that his ministry signed a Memorandum of Understanding on importing 1 Million Tonnes of rice from India as it is at risk of the El Nino weather phenomenon. “This is just an MOU for a fixed price. The goods exist, but we have not purchased them,” Hasan said.
Indonesia was about to import 1 Million Tonnes of rice for quite some time now, but no deal has been closed yet. Trade and official sources clarified this. Official sources in India denied that any MOU has been signed with Indonesia for rice trade as was reported by some news agencies, particularly by Antara.
Talks regarding import were going on
Trade sources said India and Indonesia have been in talks over the past few months but nothing had fructified yet. “If Indonesia had signed an MOU, do you think it would have been done quietly?” a trader questioned. Official sources in New Delhi said no trade deal has been signed yet with Indonesia on the rice export deal. However, another trade source said the deal will likely happen soon as The Rice Exporters Association (TREA) is in touch with the Indonesian embassy in New Delhi.
A letter to support farmers to get more than MSP
BV Krishna Rao (TREA President) wrote a letter to Manoj Jha (Union Agriculture Secretary) and requested the Centre to sign an MOU with Indonesia for exporting 1 Million Tonnes of rice “at mutually beneficial prices”. He also mentioned that “We understand that such a MOU is not legally binding on either government. However, by consenting to such MOUs, the Ministry of Agriculture can facilitate farmers in obtaining prices higher than minimum support price (MSP),” Rao said. Such a MOU will not only contribute to foreign exchange earnings but also help reduce the trade deficit “between the two friendly nations”, he said.
Indian rice price is more competitive
The common reason why Indonesia usually overlooks Indian rice for imports is because of its best prices than other countries. Indian rice price is lower by USD 30 per tonne than prices of Thailand or Vietnam. Though there is an export duty of 20%, India is able to quote the best prices.
As per the Thai Rice Exporters Association, 5% broken Indian white rice is quoted at USD 453 – 457 per tonne compared with USD 509 quoted by Thailand and USD 478 – 482 by Vietnam.
Despite El Nino, India could export more rice
A wave of fear is going through Asian countries such as Thailand, Vietnam, and India that their crops could be affected by El Nino, which leads to deficient rainfall.
According to Thailand’s Kasikorn Research Centre, a subsidiary of Kasikorn Bank, rice production in the South-East Asian country could decline by 6%. In India, the rainfall is deficient by 37% during the current South-West monsoon. As of 16th June, This has resulted in the paddy acreage trailing by 14.6%. India’s rice exports have been sustained by another record production of 135.54 Million Tonnes during the period of July 2022 to June 2023, compared with 129.47 Million Tonnes last crop year.