Stocks stuck after drone attacks, rice traders bear the brunt

Neeraj Mohan

Advertisement

New Delhi, December 26

Punjab and Haryana rice traders are grappling with the repercussions of the drone strikes on cargo vessels in the Red Sea, where their consignments totalling millions of tonnes, remain stranded. The Middle East conflict has heightened tensions among rice exporters, who fear substantial losses if the issue remains unresolved, leading to delayed deliveries.

Having around 70 per cent share in the country’s total basmati exports of around Rs 40,000 crore, rice exporters from Punjab and Haryana are particularly affected due to this development and seek government intervention to address the situation as shipping firms are increasingly avoiding Red Sea shipments following the attacks.

Exporters anticipate a potential surge in freight rates for Indian shipments to Europe and Africa if the security concerns persist in the Red Sea area.

Vijay Setia, a Haryana-based rice exporter and former president of the All India Rice Exporters Association (AIREA), highlighted the unprecedented challenges faced by the industry.

“Nearly 80 per cent of the total basmati exports of India are bound to Middle East and 50 per cent of this is exported via Red Sea. This is an unprecedented problem we are facing now,” he said, adding that most shipping companies are reluctant to navigate these waters, which may escalate the freight charges significantly.

Despite these challenges, rice exporters are committed to delivering orders at previously agreed-upon prices. In response to these difficulties, the exporters have decided to engage with the government, urging it for immediate steps to address the issue and provide relief.

Speaking on the gravity of the situation, Nathi Ram Gupta, president of AIREA, underscored the risk posed to their trade by the current developments, with many consignments halted by shipping companies. He expressed the intention to take up the matter with the authorities concerned immediately.

According to the traders, the kharif season was already full of challenges for the rice traders as earlier they had to hold protests after the government had fixed the minimum export price of basmati at $1,200 per tonne, which was later revised to $950. Even this year, they had to purchase basmati paddy at higher prices, ranging from Rs 3,500 to Rs 6,500 per quintal.

While the surge in basmati exports was anticipated to contribute significantly to narrowing India’s agricultural trade gap, the impact of the Red Sea disruptions has added a layer of concern. The Red Sea route holds strategic importance for India’s maritime trade with the Middle-East and Africa.