Basmati exports to surge on West Asian demand
A weakened rupee and enhanced demand from Iran and Saudi Arabia are set to push India's basmati rice export to a new high at 4 million tonnes, which will enable Indian players to net about $ 5 billion.
This may also partly help the government’s drive to reverse fall in exports over the last one year. Exports in first eight months of the current fiscal stood at $174.3 billion, a decline of 18.5 per cent over the same period last year.
Exports of basmati rice, which stood at 3.7 million tonnes last year, is set reach 4 million tonnes in the April-March period of 2015-16 due to lower price and depreciation of rupee. This has also allowed the aromatic rice to get increased interest in traditional export markets.
“In October, domestic prices crashed leading to lower realisation. But since prices have improved, there is better realisation now,” said Vijay Setia, a former president of the All India Rice Exporters Association. Now export of Pusa 1121, the highest quantity of basmati rice exported under one variety, is being contracted at nearly the same price as last year’s at about $ 1,000 a tonne.
Exporters and traders attribute better price realisation in basmati rice to increased demand in domestic market as well as opening of import by Iran.
India shipped about 20,500 tonnes of Pusa 1121 basmati rice in a week ending December 26 only to Iran, a trader said, adding the demand will further increase after trade has opened. Basmati rice to Iran is being shipped mainly from Mundra port as the land customs depot at Patiala, he said.
“This was not due to Iran as that country never stopped import,” Setia said. The import permits were there with a few traders in Iran who were buying from select exporters from India, he said.
Iran last month lifted an unofficial ban on import of basmati rice by resuming import permits. The curb was imposed to protect domestic farmers there. Indian basmati rice exports to Iran dropped 35 per cent to 9.35 lakh tonnes in 2014-15.
There was a dip in prices for a short period during October. Export price was around $800 per tonne, which has now increased to $950-1,000 a tonne, traders said. Last year the average basmati price was priced at about $1100 a tonne, they said.
This year basmati paddy of Pusa 1121 started with Rs 1,400- Rs 1,500 per quintal when the crops arrived in the market from September. Last year the crop sold at Rs 2,500-Rs 2,900 per quintal. Farmers in major producing states of Haryana and Punjab protested this fall in basmati rice, which led to the government purchasing the paddy at minimum support price.
However, the only worry is about the situation in Yemen and Syria. Besides, the growing deficit in the West Asian economies are due to lower crude oil prices, he said, adding, ``Let’s hope that the eating habit is not affected there,” Setia added.