West African rice market adjusts to price drops after India ends export duty

West African rice buyers are adjusting to India's recent removal of its 10% export duty on parboiled rice, which has contributed to price drops in the region.

Platts, part of S&P Global Commodity Insights, assessed parboiled 5% STX CFR Cotonou rice at $535/mt on Oct. 25, its lowest level in 11 months and down $25 from Oct. 22 when India lifted the export duty. This coincides with falls in India's export market price, with parboiled Oct. 25 assessed down $38/mt since Oct. 22.

West African market participants anticipate a continued downward trend in parboiled rice prices with the removal of India's export duty. As prices decrease, buyers are looking to sell their current stocks.

“It’s all about risk booking,” said a Benin-based buyer, emphasizing the cautious approach many are taking in light of the recent fluctuations.

A Benin-based importer agreed.

“The destination market has yet to fully adjust to recent price changes in origin markets,” he said.

Concerns about potential further price declines are widespread, leading many importers to hesitate in making significant purchases. Despite expectations for increased demand due to the upcoming Christmas and New Year's celebrations, this demand has not yet materialized.

“Due to this fluctuation, everyone is waiting,” an Indian exporter said.

A second importer in Benin agreed, offering, “There will be more clarity in pricing in the coming weeks."

Regional impact

West Africa has been the largest importer of rice from India over the past three years, with Benin importing the greatest amount -- 1.2 million mt -- of non-Basmati rice in 2023-24, according to India's Agricultural and Processed Food Products Export Development Authority, which facilitates the export of agricultural goods. This trend underscores India's importance as a key supplier in the region. Other West African markets, such as Togo, Ivory Coast and Senegal, are also affected by India’s policy changes. These markets are also open to white rice, which was previously imported from Thailand, Pakistan and Vietnam.

With India removing its minimum export price on non-basmati white rice, more exports to West Africa are expected, intensifying competition among suppliers from Thailand, Pakistan and Vietnam.

“It will be competitive for the other rice markets now,” an Ivory Coast-based importer said.

The removal of India's white rice minimum export price on Oct. 23is unlikely to significantly impact the parboiled rice market. In West Africa, demand for parboiled remains steady because it has a texture and flavor that many West African consumers favor and is more filling and more economical compared to other varieties.

“With white rice now available, the demand is divided [with parboiled]," an importer in Togo said.

Nigeria rice production

Nigeria, the most populous nation in Africa, has a particularly high demand for parboiled rice. Local production cannot meet consumption needs, leading to over 3 million mt of rice imports annually. The major challenges in Nigerian agriculture are the high cost of and limited access to high-quality seeds, fertilizers and machinery and of poor public extension services. This heavy reliance on imports raises concerns about food security and economic stability in Nigeria, traders say.

The Nigerian government has suspended duties, tariffs and taxes on imports of wheat, corn, husked brown rice and cowpeas for 150 days -- though, the list of approved importers has not yet been released -- to address the country's food inflation rate, now at 37%, according to the Central Bank of Nigeria. This high inflation rate poses challenges for consumers and businesses as rising prices reduce purchasing power and increase economic pressure.

Nigeria's rice harvest season has begun and will soon be in full swing, according to millers in the country. Its total yield has increased to 2.5 mt/hectare in 2024 from 1.9 mt/ha in 2014, a 24% rise, according to the US Department of Agriculture. This increase in yield is promising, but challenges remain, particularly in ensuring that local production can keep pace with Nigeria's growing population.

With Nigeria's ban on rice imports, much of its stocks are illicitly sourced from Benin, the largest market for Indian parboiled rice in West Africa. This relationship highlights the interdependence of the rice markets in West Africa.