Basmati exporters are optimistic about overseas demand and have purchased paddy at prices that are 12-24% higher than a year ago, boosted by an increase of 11% in exports of the fragrant rice during the first half of the current fiscal.
The buying frenzy that has led to the price increase has been observed at agricultural produce marketing committee (APMC) yards, despite the crop arriving 20% earlier last month.
Arrivals of basmati paddy at APMC yards in Haryana, Punjab, and Uttar Pradesh, which account for 97 percent of the country's basmati production, increased by 20.3% to 13.51 lakh tonnes (lt) in October from 11.23 lakh tonnes (lt) the previous year, according to Agmarknet, an Agriculture Ministry unit. While Haryana has seen a more than threefold increase in arrivals to 2.65 lakh tonnes (lt), Punjab has seen a 43% decrease to 2.13 lakh tonnes (lt). In October, arrivals in Uttar Pradesh increased by 31% to 8.72 lakh tonnes (lt).
Normally, higher supplies cause price drops, but in the case of basmati, paddy prices increased in October, rising as much as 18.6 percent to Rs 3,322/quintal in Haryana and 11.5 percent to Rs 3,045/quintal in Uttar Pradesh. The average mandi rate in Punjab has risen to Rs 2,724/quintal, a 23.5 percent increase over the previous year.
According to an exporter, basmati exports are no longer limited to the old big players because many new people have entered the trade and are exporting small quantities. "Fortunately, as a result of previous experience, these new players have become wiser and are not willing to supply on full credit, nor are they lowering the contract price excessively," he said. Buyers in some countries were reported to have defaulted on payments in 2022.
According to the most recent report from the Agricultural and Processed Food Products Export Development Authority (APEDA), shipments of basmati rice increased to 21.57 lakh tonnes from 19.46 lakh tonnes a year ago. However, the value increased by 37% to $2.28 billion from $ 1.66 billion. Due to the depreciation of the rupee, the growth in Indian currency is even higher- 46%- at Rs 17,897 crore versus Rs 12,268 crore. In fact, basmati rice export realisation has risen to $1,057/tonne this fiscal year from $853/tonne the previous year.
"The commodity and inflation cycle has greatly benefited basmati rice export prices. Oil-producing countries are major basmati rice importers, and their economies are performing well. Until there are any unexpected geopolitical disturbances or the imposition of non-tariff barriers (NTBs)," trade policy analyst S Chandrasekaran predicted. The impact of unusual events will be mitigated if the government is prepared with appropriate plans, he said.
(Inputs taken from Business Line)
