Basmati woes to worsen as new crop hits mkt

India?s fast losing position as the world?s foremost producer and exporter of basmati (aromatic) rice could be further dented as the new crop hits the market over the next few weeks.

Exporters and traders warned that the export duty of Rs 8,000 a tonne and a minimum export price (MEP) of $ 1,200 per tonne on basmati rice which has already made Indian rice costlier to its sole competitor Pakistan would also create obstacles in absorbing the expected bumper output of basmati rice. ?We would see a worse scenario in the coming weeks as the bumper yield enters the market with area under cultivation being increased significantly,? Rajeev Setia, President, Punjab Rice Miller and Exporter Association, told FE.

Indian farmers planted more areas under different basmati rice varieties like PUSA 1121, Super or PUSA and traditional in 2008-09 due to high price realisation last year.

According to industry estimate, the area under PUSA 1,121 has almost doubled to 6.78 lakh hectares in 2008-09 against 3.42 lakh hectare last year. Similarly area under Super or PUSA variety rose by 50% to 6.35 lakh hectares, from 4.09 lakh hectares last year, while the area under traditional varieties rose to 3.49 lakh hectare, up from 2.9 lakh hectare last year. In its bid to control inflation and ensure availability of food grains, India fixed an export duty of Rs 8000 a tonne and a Minimum Export Price (MEP) of $ 1,200 per tonne on Basmati rice in April. Since April world food availability has improved significantly while the government continue with the policy of higher export duty and MEP.

With the changing global scenario, the Pakistan has lowered its MEP and exporting Basmati rice lower at around $800 per tonne. ?Simply due to price consideration, our major importing countries like Iran and Saudi Arabia are gradually shifting their preference for the basmati rice from Pakistan,? Setia said.

What is to be noted here is that about six months back, basmati rice from India used to command price as high as $2,000 per tonne when the demand particularly in the Gulf countries were all time high. Due to global economic slowdown, even the Jasmine variety rice from Thailand is quoted at around $450 a tonne, a decline of more than 50% while price of basmati rice has also plummeted by half to about $1000 a tonne.

Even, a senior official from Agricultural & Processed Food Export Development Authority (APEDA) also admit that the country?s exports of basmati are expected to adversely impacted due to continuing with high MEP. ?We have been communicating the concern of the exporters to commerce ministry and hope that necessary actions towards lowering the MEP and withdrawal of export duty is taken soon,? an APEDA official said.

India?s Basmati rice exports have been rising consistently since one decade. The exports from India rose to Rs 3548 crore during 2007-8 from Rs 2482 crore achieved during the previous year. In terms of volume, the export of basmati rice has gone up from 7.71 lakh tonnes in 2003 to an estimated 12 lakh tonnes in 2008.

The annual production in the country hovers at around 10-15 lakh (1-1.5 million) tonnes a year, of which around two-thirds is exported. India exported around 12 lakh tonnes (1.2 million tonne) of basmati rice during 2007-08. While Pakistan exported 7 lakh tonne during the same period.