Basmati rice exports to US might be hit

Rice Sector of Pakistan
February 3, 2016
Ripples in global rice market
February 20, 2016

Basmati rice exports to US might be hit

US seeks mandatory registration of Indian exporters with National Plant Protection Organisation

Branded basmati sales to touch 2.9 mt

In a blow to basmati players, the US has made registration with National Plant Protection Organisation (NPPO) mandatory for Indian exporters of aromatic rice.

While the registration process has been on for the past three years, the Agricultural and Processed Food Products Export Development Authority (Apeda) has issued a warning that basmati rice exports to the US would be allowed only from rice mills / processing units registered with NPPO effective April 1.
The Apeda directive assumes significance in terms of rejections of Indian basmati rice consignments by US’ phyto-sanitary authority in the past. Also, the US authority had in 2011-12 detected cabinet beetle in basmati rice of Indian origin. Since then, the US authority became more quality-conscious with regard to basmati rice import from India.

“This is perhaps an attempt to regulate the market as consignments shipped to the US develop some issues related to pests or any other things. Mandatory registration with NPPO will filter out opportunistic exporters, while genuine ones would continue. This will help control the rate of rejection of consignments also,” said Gurnam Arora, joint managing director of Kohinoor Foods, the producer and exporter of Kohinoor brand of basmati rice.

Basmati rice exports to US might be hit
India ships around 100,000 tonnes of basmati rice worth $140 million to the US every year. But, Indian exporters had in the past shipped more quantity either for stock-building there or to compensate quantity of rejections. The US market constitutes nearly five per cent of India’s annual basmati rice exports to the tune of 3.7 million tonnes (Rs $4.5 billion).

Arora believes the quantity of exports to the US would decline, albeit marginally, in the coming years owing to elimination of opportunistic exporters from the system.

Trade sources estimate 10-15 per cent of consignments get rejected every year.

Apeda has issued an advisory to all authorities to issue phyto-sanitary certificate for export of rice to the US, only to registered rice mills / processing units. Following registration, NPPO would audit the plant before issuing export certificate.

“Around 95 per cent of exporters have already got registered with NPPO with basmati rice shipment happening in very organised manner. Therefore, it his highly unlikely there will be any impact in terms of basmati rice exports to the US with 10 per variation being common,” said an Apeda official.

China has also raised the practice of standard operating system of basmati rice exporters in India. While China has allowed its direct market access for Indians, a significant quantity already goes to the former through Hong Kong. As a consequence, direct demand from China has not emerged in a significant quantity yet.

“But, NPPO-registered exporters would soon start basmati rice exports to China soon,” said Rajan Sundareshan, executive director of All India Rice Exporters’ Association.

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