India may find it difficult to win back 100% broken rice importers
India faces challenges in regaining broken rice buyers after lifting the export ban, as prices remain higher than competitors like Vietnam and Pakistan. Increased domestic demand for ethanol and poultry feed limits availability. While African markets offer potential, India may need to lower prices. Analysts expect exports between 1.2-1.6 million tons, with potential growth if China increases purchases.
India will likely find it difficult to woo back global buyers of broken rice after the government lifted the ban on its exports on March 7, traders and analysts said.
“India will not be able to touch the magic number of broken exports before it imposed the ban,” said New Delhi-based exporter Rajesh Paharia Jain.
The Centre banned broken rice exports in September 2022 after food inflation soared, and there were fears over the kharif production following deficient rainfall in the growing areas.
“The government allowed exports of broken rice as domestic prices of the grain have dropped significantly,” said S Chandrasekaran, a New Delhi-based trade analyst.
Record rice stocks
Currently, rice prices in the global market are over two-year lows. Also, the warehouses are overflowing with rice stocks of a record 36.7 million tonnes as of March 1, 2025.
“Indian broken rice is expensive than other origins such as Myanmar and Pakistan. Our exporters are quoting $360 a tonne,” said M Madan Prakash, Director of Rajathi Group, which ships out agricultural produce.
According to the Vietnam Food Association, Vietnam and Pakistan are currently offering 100 per cent broken rice at $307/tonne, while Thailand is quoting at $354.
In the 2021-22 fiscal year, when India exported a record 17.26 million tonnes (mt) of non-basmati rice, broken rice made up 3.89 mt.
Covid gains
“India’s problem is that broken rice is used for ethanol manufacturing,” said Prakash.
The Food Corporation of India (FCI) offers broken rice at ₹2,250 a quintal from January under the open market sale scheme. Ethanol distilleries can buy 2.4 tonnes at this rate.
Jain said broken rice exports prospered during Covid as weather conditions in other rice-growing countries were not favourable, and their production dropped by 20-30 per cent.
During Covid, ethanol plants in India were under construction. Now, they are operational. “Brokens (from FCI) will always be their choice for conversion,” the New Delhi-based exporter said.
The ethanol demand has added a new dimension to the market demand. Indian broken rice availability will be shaped by what is left over in the market.
PDS diversion
Chandrasekaran said that besides ethanol, broken rice is in demand from the poultry sector, which is substituting it for a pricey maize.
Though India has permitted broken rice exports, getting back customers will not be easy, said a South India-based exporter.
Jain said, “There was maximum diversion of rice issued through the public distribution system (PDS) during Covid. Though a little slow, it continued during the post-Covid period too.”
Also, during Covid, the difference in prices between 25 per cent and 100 per cent was thin. However, there is a $50-60 a tonne difference in the free-on-board (f.o.b) prices. For example, Vietnam is quoting 5 per cent broken white rice at $390 and 100 per cebt broken at $307.
Africa, the hope?
With India now returning to the brokens export market, prices are likely to decline further. However, barring Thailand, prices of other origins have gone up a tad this week.
Jain said Indian exporters have begun selling more of 25 per broken as a cheaper option. “Some exports took place with even 45 per cent brokens too!” he said.
Though India banned exports of broken rice, it allowed government-to-government exports, particularly to African nations such as Senegal.
“India will benefit from African origins such as Senegal, Gambia and Mali as freight is less for bulk shipments. On the other hand, ASEAN sellers will sell more to Indonesia and China,” said Jain.
However, India may have to lower its offer prices, or else it could lose to other Asian neighbours.
Lower shipments
China is buying more broken rice from Vietnam as the offer from the latter and freight charges are lower.
The New Delhi-based exporter said the rabi crop can drive prices lower as procurement by the FCI is less. This week, the Ministry of Agriculture forecast rabi rice production at 15.75 mt compared with 14.6 mt a year ago. Kharif rice production has been pegged at a record 120.6 mt this season against 113.26 mt in the previous season.
Overall, broken rice exports will likely be lower than the volumes seen during 2021-22, with demand for ethanol manufacturing being the main disruption. “Bigger volume is possible, but we expect broken exports to be 1.2-1.6 mt. If China buys brokens from India, exports could rise to 3 mt,” said Jain, adding that 100 per cent broken rice could now figure in 25 per cent broken consignments too.
Chandrasekaran said India’s decisions to open up the rice market have been done together. “The government should have carried out these measures one after the other, and slowly,” he said.
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Source : The Hindu Business Line
