A dispute between National Cooperative Exports Ltd (NCEL) in India and a Singaporean aggregator, along with stricter customs procedures in Chennai and Thoothukudi ports, has resulted in only 250 tonnes of rice being shipped to Singapore since March 1, exacerbating potential rice shortages. Singapore, which requires a three-month stockpile of 50,000 tonnes of rice, faces uncertainties in supply due to reduced shipments and internal procurement challenges. The disagreement, which revolves around the aggregator's demand for an 8% margin—significantly higher than the usual 2%—has led to a breakdown in negotiations with NCEL, affecting rice availability in Singapore.
Customs tightening in India has further complicated the situation, with increased scrutiny over invoicing and potential under-invoicing leading to delays in shipment clearances and additional costs of $70 per tonne for exporters. This heightened vigilance has raised concerns about potential mislabeling of rice varieties, prompting customs to demand physical verification of shipments. These developments have made exporters hesitant, fearing changes in the market by the time shipments reach Singapore.
The backdrop of these challenges includes a global decline in rice prices and India’s imposition of export restrictions to manage domestic supply and prices. India's competitive edge in the global rice market has diminished, and its export policies, including a 20% tax on parboiled rice shipments and bans on certain rice varieties, have influenced market dynamics. These measures, aimed at stabilizing domestic food security, have impacted international trade and could lead to direct negotiations between Singapore and India or prompt Singapore to explore contract farming in India to prevent future supply disruptions.