Fall in crop output may raise basmati rice prices further

NEW DELHI: Rates may further firm up as Iran is likely to lift ban on imports of the aromatic rice from India; prices jump 30% in Punjab and Haryana markets.

A shortfall in arrivals of basmati crop across the rice bowl of Punjab and Haryana has seen a 30% jump in prices quoted for the new crop signalling consumers of the aromatic long rice to prepare to pay more ahead of the festive season.

Traders and exporters said prices can further firm up with Iran likely to lift a ban currently on imports of basmati rice from India. Iran has emerged as one of the largest importers of Indian basmati rice in recent years.

"By November, we can expect basmati prices to further increase as international buying will begin and production expected to be lower than the previous year," said Sabyasachi Majumdar, senior vice-president, Indian Credit Ratings Agency.

He said domestic consumers might see a slight increase in prices and current discounts ranging from 10-20% being offered by branded players might be reduced or withdrawn.

Basmati millers and retailers said it was too early for them to speak about prices as crop arrivals were expected to pick up in a fortnight. However, they felt that it was a good year for farmers.

"The opening price for the basmati 1509 variety this season is higher than the previous year. It's a good year for farmers who suffe red a loss last year due to excess production," says Priyanka Mittal, director at KRBL, which owns India Gate basmati brand.

"Once Iran opens imports of Indian basmati by November 25, we can see a further increase in prices," she says, adding traders should exert caution and not jump the market in hope of making speculative gains.

Vinod Goel, a trader in Karnal Mandi of Haryana, said the 1509 basmati variety was being sold by farmers at Rs 1,750-1,900 a quintal compared at Rs 1,400 a year ago. The popular basmati variety 1121 crop was less by over 2030% than last year as farmers had gone for parmal variety.

"Farmers should be the beneficiaries this year and see an increase of 20% over the previous year. For consumers, it might be a 5% increase in prices," adds Kuber Seth, director, DCP India, which sells basmati under the Asbah brand.

Seth said farmers will not be able to get the 2014 level prices, when basmati was quoted at Rs 10,000 a quintal. "The investors' sentiment is not to buy basmati for the entire year by OctoberNovember, as we currently do, but to buy as per their demand."

India is the leading exporter of basmati rice to the global market.

The country exported 4.05 million tonnes of the aromatic long grain basmati rice worth Rs 22,718.44 crore in 2015-16.

Vijay Setia, former president of All India Rice Exporters' Association also added that basmati prices will be in the range of Rs 2,200-2,700 per quintal. Due to the cash crunch with Indian exporters and banks not ready to restructure loans or lend money to non-performing units, the industry was looking for government support.