Basmati prices override higher output estimates

The new basmati crop has opened at much higher rates over the last year's prices even as the industry estimates a 15 per cent jump in production due to higher acreage. Basmati manufacturers have already hiked prices by about 10 per cent in September, mainly in anticipation of firm paddy prices. Haryana and Punjab are the two main producers of the basmati paddy.

Sharbati, which is a non basmati paddy but is marketed as long grain rice, has opened at about Rs 1,300 a quintal compared with Rs 850 last year. Pusa basmati paddy that opened at Rs 1,000 a quintal last year and then moved to Rs 1,400 levels has opened almost 50 per cent up at Rs 2,100 a quintal this year. The 1121 variety has also opened 50 per cent higher over the last year's price of Rs 1,400.

"Though the overall basmati crop size is estimated to be higher by about 15 per cent than that of the last year, paddy prices have opened firm. This is mainly demand driven," said Vijay Malik, vice-president of LT Overseas, owners of 'Daawat' brand.

Since last October, prices of various categories of basmati rice have moved up by 30-40 per cent. And industry anticipates further scope for price revision, as demand remains buoyant.

"Demand for a premium product such as basmati rice is driven by high income levels and we are witnessing a strong demand, both in the domestic and overseas market. We are hopeful of passing on whatever increase we incur on the raw material side," said Danish Beg, assistant financial controller of Rei Agro, producer of 'Real Magic' basmati.

The high basmati price may not have much impact on the domestic market as consumers of traditional basmati could shift to pusa basmati, which is priced slightly lower. But basmati eaters are not likely to shift to non-basmati, said an industry expert.