Govt weighs curbs on exports of 100% broken rice after paddy area shrinks

India, the world's biggest rice exporter, is considering whether to restrict exports of 100% broken rice, government and industry officials told Reuters on Friday, after the paddy area has been reduced by a lack of rainfall.

The potential export curbs could lift rice prices globally because India accounts for more than 40% of the world's rice shipments. It could also hit a few poor African countries that import 100% broken rice for human consumption, though that variety is mainly used for feed purposes.

"We have been discussing whether we need some sort of curbs on 100% broken rice exports," said a senior government official involved in the decision process.

India is more than comfortable in terms of both private and government rice stocks, so there is no point considering any curb on overall rice exports, the official said, adding that the discussions are confined to broken rice.

The state-run Food Corporation of India held 41 million tonnes of milled and rice paddy stocks as of Aug. 1, far above the government's requirement of 13.5 million tonnes by July 1.

Below-average rainfall in key rice-producing states such as West Bengal, Bihar and Uttar Pradesh prompted the latest discussions in a country that has already banned wheat exports and restricted sugar shipments this year.

India's farmers have planted paddy on 34.37 million hectares, down 8.3% from a year ago, farm ministry data showed last week.

India usually exports 5% and 25% broken rice, but demand for 100% broken rice has risen sharply in recent months, particularly from drought-hit China, exporters said.

"The local cattle feed industry has been demanding a restriction on exports of 100% brokens so they can have more supplies," said one exporter based in Andhra Pradesh.

In 2021 India exported 21.5 million tonnes of rice, including 3.6 million tonnes of broken rice.

China was the biggest buyer of broken rice, with purchases of 1.1 million tonnes in 2021, while African countries such as Senegal and Djibouti bought brokens for human consumption.

"Instead of banning, the government should impose duty on the exports. This will help India keep a presence in the market and allow African countries to import," said B.V. Krishna Rao, president of the All India Rice Exporters Association.

The price difference between 100% broken and 5% broken has dropped to $15 a tonne from more than $70 a year ago, exporters said.

India's 5% broken white rice was quoted around $340 a tonne this week, against $325 for 100% broken white rice, they said.