A 20% decline in 2 months is a cause of worry for exporters.
The country’s basmati rice exporters are witnessing a slowdown in export demand and realisation due to lower demand from Iran and the European crisis.
“The export market has slowed down and there is a fall of over 20 per cent in the first two months of the current financial year. Slowdown was seen in exports to the Europe, the US and the Middle east. Even realisation is down by over 10 per cent compared to last year. This is just the beginning and we expect the situation to improve,” said Gurnam Arora, joint managing director, Kohinoor Foods, which sells rice under the ‘Kohinoor’ brand.
Europe and Iran are major buyers of Indian basmati rice. According to the Agricultural and Processed Food Products Export Development Authority, the country’s basmati rice export stood at 1.55 million tonnes in 2008-09, valued at Rs 9,477 crore. In 2009-10 (till December 2009), it was around 1.46 million tonnes, valued at Rs 8,146 crore.
Exports for the full year are expected to be well over 2.5 million tonnes, which would be a record. This jump is primarily due to inclusion of 1121 variety in the basmati category. The inclusion of 1121 variety of rice in basmati was done on October 2008.
“Export prices are down and this is reflected in paddy prices. Prices have been on a decline for last 3 months. Millers bought 1121 variety of paddy at Rs 2,300-2,400 a quintal last year and current price is not even Rs 1,900. Some paddy from previous year’s crop is still arriving in the market,” said RS Seshadri, director, Tilda Riceland.
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Export to Iran, a major market for 1121 rice has slowed down due to significant export from Pakistan. Pakistan is learnt to have recently supplied 200,000 tonnes of 1121 rice to Iran.
“Iran had a crop which is estimated to be higher by 25 per cent compared to last year. On Tuesday, buyers in Iran are not even ready to give an advance for supplies as they were doing last year. Moreover, the price on which the Indian exporters are billing the rice is not binding on Iranian buyers. It is just a suggestion and exporters are taking a cut in the final payment,” Seshadri said.
Most basmati millers in India had bought paddy paying high prices to farmers last year in anticipation of a buoyant 1121 rice demand from Iran. However, against a price of $1,060 a tonne in last quarter, exporters are now getting $900 a tonne. Iran accounts for almost half of 1121 export, estimated at 1.3-1.4 million tonnes.