Basmati prices to remain firm

The prices of Basmati paddy and rice are likely to remain firm this year due to estimates of lower output, following erratic monsoon rain in major growing regions. Data compiled by the India Meteorological Department (IMD) showed the country’s cumulative rainfall this season was 5 per cent lower than the long-period average (LPA), with the northwest region recording 11 per cent less rainfall until September 20.

According to industry sources, lower rainfall in major Basmati paddy-growing regions not only hit the overall sowing area but also standing plants in the fields. The price increase might hurt the export of this aromatic rice, a favourable choice for consumers in Iran, Saudi Arabia, and European countries.

“During the current season, there has been rainfall deficit in the key Basmati rice-producing states of Uttar Pradesh and Haryana over the previous year’s monsoon season till mid-September 2017 as well as lower water reservoir levels in Uttar Pradesh. These factors can translate into lower paddy production in the current crop season, and thus the paddy prices are likely to open firm in the oncoming procurement season,” said Deepak Jotwani, assistant vice-president, Icra.

Meanwhile, India’s Basmati rice exports have witnessed a rebound in the current fiscal year, with the first quarter of 2017-18 (FY18) registering a 32 per cent growth in exports contributed by 25 per cent increase in realisations and 7 per cent increase in volumes. This comes after a three-year consecutive decline in Basmati exports till FY17 (~21,605 crore).

In the past, despite the volumes holding firm, the exports have been adversely impacted by pressure on realisations (from peak of ~77,988 a tonne in FY14 to ~54,011 a tonne in FY17), driven by lower demand in the global market as well as lower paddy prices over the procurement seasons of FY15 and FY16.

Gurnam Arora, joint managing director, Kohinoor Foods Ltd, said, “Basmati rice is likely to remain firm this year on lower output estimates.”