Falling Re fails to make rice exporters smile

Even as the depreciating rupee is helping some exporters take home a higher margin over their exports, the same cannot be said about the rice exporters.

According to Vijay Setia of the Rice Exporters Association of India, rice is traded at a thin margin and that most of the exporters hedge their transactions after entering into agreement. “The global buyers of rice seeks supplies from multiple suppliers. They look for the weak suppliers who are flexible in pricing and then renegotiate with the remaining sellers. Falling currency value has not helped us,” he said.

J K Suri, the chairman of Amir Chand Jagdish Kumar Exports Limited (Aeroplane brand rice), told Business Standard that the exporters who booked orders before the rupee started sliding are at a disadvantage but those who entered into the sale agreement during the rupee depriciation may earn a premium.

He added that the exporters who borrowed PCFC (pre-shippment credit in foreign currency) from banks have ended up paying almost 20 per cent higher in terms of repayment of their installments in the wake of volatile currency.As the repayment of loan is to be made in dollars the value of borrowed funds has gone up.

The branded players in this segment have substantial fund requirements as they have to store huge quantities of rice for the whole year.

The only silver lining for the rice exporters is that ‘Ramazan’ is round the corner and since the countries of Middle East are big importers of rice for this occassion, this may provide a cushion to them.