Rice exports from India, the world's second-largest grower, may decline this year from a record as buyers turn to cheaper supplies from Vietnam and Pakistan, according to a traders' group.
Shipments may fall 6 percent to 9.5 million tons in the year that started in April from 10.1 million tons a year earlier, said Vijay Setia, a former president and member of the All India Rice Exporters Association. Exports of non-basmati rice are estimated to drop 15 percent to 5.5 million tons, while overseas sales of aromatic basmati variety are set to jump 14 percent to 4 million tons, he said.
India's government raised the minimum price it pays to growers to a record last year, making supplies from the country more expensive amid a global glut. Thailand's plan to sell grain from state stockpiles may further depress prices, which are set for a second quarterly advance, said B.V. Krishna Rao, managing director of Pattabhi Agro Foods Pvt., an exporter.
"The government support mechanism is so strong in India that it's difficult to match Vietnam and Pakistan," Rao said by phone from Kakinada in Andhra Pradesh. "With the rupee falling to a record low, exporters have been forced to cut prices" and non-basmati shipments may slump to as low as 4 million tons should Thailand cut its export prices, he said.
His forecast was made at roughly the same time as Thai Prime Minister Yingluck Shinawatra dropped Commerce Minister Boonsong Teriyapirom from the Cabinet following criticism that a policy to buy rice at above-market rates jeopardized the country's fiscal position.
The move came about a week after Yingluck cut guaranteed rice-purchase prices by 20 percent to stem losses the government estimates at about 137 billion baht ($4.4 billion) for last year. Moody's Investors Service said on June 3 the subsidies hamper Thailand's goal of achieving a balanced budget by 2017 and are negative for the nation's sovereign ratings.
Thailand has spent 588.7 billion baht since October 2011 to buy 40.47 million tons of unmilled rice from farmers. The program has increased domestic demand and purchasing power by 2 percentage points and helped improve farmer income by about 115 billion baht a year, according to the government.