Shrinking realisation from Basmati rice exports in the last two years has pulled down paddy prices at key mandis across Haryana and Punjab.
The Basmati paddy prices at two key mandis — Karnal and Amritsar — have fallen from a range of R4,000 -R4,300 per quintal in 2013 to around R1,350-R1,450 per quintal at present. Exporters say that sharp fall in paddy prices would hit farmers’ realisation and a chunk of growers of aromatic long-grained rice would shift to other crops in the next season.
According to latest data, the realisation from Basmati exports during April-July 2015 have fallen by more than 19% to R8,399 crore from R10,378 crore realised during the same period previous fiscal. However during the same period, the volume of aromatic rice exports has risen by more than 15%.
Commerce ministry sources said that average realisation from Basmati rice exports in the first quarter of the current fiscal has fallen to $1,050 a tonne from $1,295 a tonne in 2013-14.
Many rice exporters have been demanding a curb on prevalent practice of direct advance (DA) where the rice exporters send the consignment to importing agencies without settlement of payment. This leads to lower and delayed settlement of payments.
“Because of this practice of DA by a number of exporters, the realisation from the Basmati exports is shrinking over the years, which would hit the industry hard,” Vijay Setia, former president, All India Rice Exporters Association (AIREA), told FE. Setia said lower realisation would hit the farmers most.
Besides, rice exporters have been demanding imposition of minimum export price (MEP) or an export tax on Basmati shipment by the commerce ministry for curbing fall in prices.
In July 2012, the government had scrapped the $ 700 per tonne MEP on Basmati to boost exports. A few months earlier, the government had reduced MEP on Basmati to the United States to $700 a tonne from $900 a tonne. In 2008, then finance minister P Chidambaram had imposed an export tax of $200 per tonne on Basmati shipment.
“The aromatic rice variety offers high returns to farmers. Moreover, it consumes less water than the non-Basmati varieties. If realisation is less for the farmers growing Basmati rice, it would be discouraging,” a commerce ministry official said.
“A product like Basmati should command premium in global market. Under-realisation from rice shipment would be detrimental for the grain processing industry,” a leading exporter said
The Punjab government since last year has abolished taxes on the Basmati paddy procurement for encouraging procurement of grain by the food companies. Besides, the state government is encouraging farmers to take up Basmati varieties such as Pusa 1121 and 1509 as they consume less water compared to non-Basmati varieties.
Haryana and eastern Uttar Pradesh are also key producer of Basmati rice.