High prices may dent basmati exports

Shortage of the rice variety led to a rise in rates.

The country's basmati exports in 2006-07 are likely to be at a three-year low, owing to a steep rise in prices of the commodity.

Basmati exports were 7.6 per cent down at 8.44 lakh tonnes between April and January of 2006-07 from 9.14 lakh tonnes exported in the corresponding period of 2005-06. In terms of value, exports declined by 8.6 per cent from Rs 2,422 crore to Rs 2,213 crore.

Total basmati exports in 2005-06 were 11.66 lakh tonnes, valued at Rs 3,043 crore, while they were 11.62 lakh tonnes, valued at Rs 2,823 crore, in 2004-05.

"Prices of basmati went up from October onwards, owing to a shortage in production and this is the main reason behind the fall in volume of exports. Final export figures may see a decline by 4-5 per cent, but we are unlikely to see a fall in terms of value since exports were contracted at high prices.

However, no fresh contracts are being done at current prices. Exporters are also facing problems, owing to the strengthening of the rupee against the dollar," said Anil Mittal, chairman and managing director of KRBL, the company that sells basmati rice under the India Gate brand. The export price of India Gate Classic is $1200 a tonne this year against $950 last year. Farmers have made good money in the last season and therefore the sowing of basmati paddy was expected to be better than the last year's, which would lead to a higher output, said Mittal.

According to K S Money, chairman of the Agricultural and Processed Food Products Export Development Authority (Apeda), exports have declined, owing to a dip in domestic basmati crop last year.

However, Money expects the gap to be covered when the final export figures for the year come.