Exports of basmati rice fall over drop in acreage, loss of markets
Basmati Rice Amid the euphoria of India clocking the highest ever  of over $50 billion in FY22, basmati rice, one of the country’s oldest anchors in farm exports, seems to have fallen off the radar screen. For the third consecutive year, basmati rice exports saw a fall over the previous year in value terms, according to provisional figures. In 2021-22, India exported basmati rice worth $3.53 billion, the lowest since 2019-20.
 
What has brought about this fall and could there be a way to resurrect this vital farm export from India? Though India is still the world’s largest exporter of basmati rice and its long-aromatic grain, smooth texture, and special qualities have made it one of the most signature food items of the country, the continued fall in export should merit a deeper introspection. Experts said the reasons were multiple, including the loss of some traditional markets like Iran, fungicide problems in the European Union, and a drop in acreage due to equal or even better returns from competing rice varieties. “There is a rise in domestic demand for basmati rice while in some areas due to increase in minimum support price, the basmati acreage has been overtaken by non-basmati rice, which is contributing to the fall in exports,” M Angamuthu, chairman, Agricultural and Processed Food Products Export Development Authority, said. In a paper presented last year, S Chandrasekaran, leading trade policy analyst and author of the book Basmati Rice: The Natural History Geographical Indications, wrote the price difference between basmati rice and common rice in 1940 was 569 per cent, based on British India documents. Between 1995-96 and 2020-21, the price difference between the minimum support price of fine paddy and basmati rice has fallen from 153 per cent to 20 per cent. “If the price difference of traditional Basmati rice and fine paddy varieties had been maintained to an appropriate level, the farmers may not have adopted evolved Basmati rice varieties. Now Minimum Support Price of Fine Paddy varieties are inching to find equilibrium with Basmati paddy price. This could be the point of no return in view of niche status, if it converges,” Chandrasekaran wrote. Sources say in the past two-three years around 20 per cent area has shifted from basmati rice to non-basmati rice in the main producing states of Punjab, Haryana, and the foothills of the Himalayas due to reduced price differentials. “Another reason for this slowdown in exports has been the stopping of purchases by Iran (one of the big markets for Indian basmati) due to US sanctions, which is a straightaway annual loss of almost 1.2 million tonnes,” Chandrasekaran said. He said basmati sales to the EU, which used to be 500,000 tonnes a year, had dropped to 150,000-200,000 tonnes due to rising problems related to high levels of fungicide. PUSA-1121 (which is one of the most common basmati rice varieties produced in India) does not qualify for duty rebate from the EU. Much of this market is slowly shifting to Pakistan, India’s primary rival in the global basmati trade. “In the past two years, the overall global markets were down and basmati rice, being a premium product purchased by niche consumers, will find fewer takers than mass items do,” Chandrasekaran said.
Date: 11-Apr-2022