INTERVIEW: Ending ban on 100% broken rice exports would benefit Indian farmers, traders: TREAC

Indian farmers and traders would benefit significantly from a lifting of the ban on exports of 100% broken white rice, Mukesh Jain, president of The Rice Exporters Association Chhattisgarh, or TREAC, said in an interview with S&P Global Commodity Insights.

India's Ministry of Commerce and Industry last October announced the removal of the minimum export price of $490/mt for non-basmati white rice, which had been introduced following the lifting of the country's white rice export ban at the end of September. India had initially imposed the export ban in July 2023.

However, the government maintained the ban on 100% broken rice exports, introduced in 2022, because of the usage of 100% broken WR for ethanol distilleries.

Jain, whose association represents the non-basmati rice sector in Central India, said that allowing exports of 100% broken white rice would boost exports, revitalize closed mills, and enhance farmers' earnings.

Chhattisgarh accounts for 15% of India's total non-basmati rice exports to over 160 countries, with TREAC having some 50 members. Of these, typically around 80% focus on container-based exports with the other 20% handling breakbulk shipments, depending on price viability, according to Jain.

Following is a Q&A with Jain lightly edited for clarity.

Commodity Insights: What is the significance of Chhattisgarh in global rice trade?

Mukesh Jain: As one of India's top non-basmati white rice producers, Chhattisgarh exported approximately 3 million mt of rice annually before the rice export ban, out of the 17.5 million mt exports nationally. Being a producing state, we want all millers to have the opportunity to export directly.

CI: How are farmers benefitting now that exports are open?

MJ: The state has taken significant steps, such as ensuring the availability of shipping lines and implementing a zero-percent mandi tax -- something unique in India. Chhattisgarh, known as the rice bowl of India, is committed to ensuring that farmers benefit from exports. With the mandi tax now at zero, paddy is being sold above the Minimum Support Price in the mandi, directly benefiting the farming community.

For instance, the government procures up to 21 quintals (2.1 mt) per farmer during the season, but an acre typically produces 25-26 quintals. The remaining 5-6 quintals are sold in mandis, where farmers are now making higher earnings. The absence of the mandi tax increases the exporters' purchasing capacity, which directly benefits the farmers by offering better prices. The removal of the mandi tax is especially beneficial for farmers. Earlier, millers factored Rupee 50 per quintal (Rupee 500/mt or $5.7/mt) for mandi tax on agricultural commodities, but in the case of rice, the impact was Rupee 75 per quintal due to the processing ratio -- 1.5 quintals of paddy are required to produce a ton of rice. With no mandi tax, millers now have greater capacity to purchase more paddy directly from farmers, ensuring that farmers earn more.

CI: How does the international demand for rice impact the state's operations?

MJ: International demand for rice can arise at any time, which is why our rice mills operate 12 months a year.

We're hearing that the government plans to auction some of this paddy, and we expect that by February-end, the necessary permissions will be granted. I anticipate a tender in March to sell approximately 4 million mt of paddy.

Most people consume seven main varieties of rice, priced between Rupee 60-100 per kilogram, which are sold in the market.

CI: What is your outlook on rice prices and market trends for the next few months?

MJ: Parboiled [PB] rice prices are expected to remain steady until the end of March. Government procurement will continue until Jan. 31, and prices are unlikely to decline until the government starts auctioning paddy, which is anticipated by the end of February.

In the international market, Vietnam's raw rice prices have crashed, while Indian PB rice remained slightly bullish due to demand from Bangladesh tenders and the influence of paddy prices. There are 3,000 exporters trading parboiled rice from India. Vietnam is not a significant supplier compared to India. Additionally, the taste of Indian rice is something Vietnam cannot replicate. However, now the market is dropping in the West African region, pressuring prices.

CI: How does Indonesia's trade relationship with India impact rice exports?

MJ: Previously, Indonesia imported rice primarily from Islamic countries due to lower import duties. However, India has improved its bilateral relationship with Indonesia and has approved 1 million mt of rice exports through National Cooperative Exports Limited [NCEL], strengthening its position in the market.

CI: What challenges exist in trading with Bangladesh?

MJ: Bangladesh tends to buy rice when its crops are damaged, which typically happens every 2–3 years. However, trading with Bangladesh is challenging due to the lack of a proper banking system. They do not offer confirmed letters of credit, making transactions risky. As a result, most Indian exporters avoid trading with Bangladesh. Only those familiar with the process -- such as providing security deposits, importing rice, and storing it in godowns [warehouses] -- engage in this market.

Currently, tenders from Bangladesh are focused on mota varieties, specifically 10% parboiled rice, which is the primary produce this season.

CI: Are we expecting any policy change with regard to 100% broken rice?

MJ: A decision on the ban on 100% broken rice is awaited. Out of the 16 million mt of paddy produced in Chhattisgarh, only 1.5 million mt are being processed into parboiled rice, while 14.5 million mt are allocated for raw rice production. Out of 14.5 million mt, with 15% of broken rice, which is 2.175 million mt.

Chhattisgarh is home to Asia's largest market for 100% broken rice, particularly in areas like Tilda Newra, where it is sold on nearly every street. As an association, we are strongly advocating for the free trade of 100% broken rice and are urging the government to lift the export ban.

CI: What steps is the association taking to ensure the government considers lifting the ban?

MJ: Reopening trade would lead to the revival of closed mills, increasing employment as these mills restart operations. Currently, NCEL is exporting 100% broken rice from Chhattisgarh, mostly sourced from Tilda Newra. The association remains confident that the ban on 100% broken rice will eventually be removed.

CI: What are your expectations for rice production and exports in 2025-26?

MJ: Rice production is expected to increase in the marketing year 2025-26. Farmers who cultivate rice are unlikely to switch to other crops, especially with the MSP set at a high level of Rupee 23,200/mt ($267.89/mt) + bonus. In Chhattisgarh, the land's fertility is ideal for paddy, and favorable rainfall further supports high yields.

Rainwater harvesting plays a crucial role in rice cultivation during the Kharif season in the state. With these favorable conditions, exports and supply are expected to remain strong in the coming year.