Amid the euphoria of India clocking the highest ever agriculture exports 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.

The price of 1121 variety of basmati rice has witnessed a considerable jump in the open market in Haryana, fetching up to Rs 1,061 per quintal more compared to last time. On Monday, a rice grower from Sheria village in Jhajjar district sold his produce for Rs 4,561 per quintal at the grain market here even as private traders had bought it for maximum Rs 3,500 last year. “We sow 1121 variety of basmati rice over 20 acres every year and store about 150 quintal for subsequent sale. Even we hadn’t expected this much gain,” said an ecstatic Naveen, the rice grower. Bhartiya Vyapar Mandal vice-president Harsh Girdhar cited several reasons for the high rates, including decrease in 1121 basmati sowing area, new markets in Iraq and Iran and global grain crisis due to the Russia-Ukraine conflict. He said rice growers had been storing some portion of their produce to sell it during off-season when it fetched higher returns. “The area under PR variety of rice, procured by the government on the MSP, rising considerably last year was another factor behind the hike in the price.”    

Rising prices and inflationary pressure have pulled down demand for branded basmati rice, cooking oil and chicken by up to 15% in March compared to the same time last year. Russia's invasion of Ukraine that started in last week of February has seen global commodity prices surging as supply chain was disrupted. Global prices of basmati rice had gone up by $200 per tonne since the war started. "The impact of global price rise is also being felt in the domestic market. This has tapered the demand in the Indian market. It is down by 15 per cent. We are seeing that people are shifting to regional rice varieties, which are comparatively lesser priced than basmati," said Gurnam Arora, joint managing director, Kohinoor Foods that sells basmati rice under the Kohinoor brand name. Even prices of regional varieties of rice have seen a price hike as export demand is robust.  

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Rice is a staple food for more than half the world’s population and makes up 20% of the global calorific value intake. Most world cuisines include rice as a main ingredient and different regions grow different varieties of rice according to local cooking preferences and environmental circumstances. While Basmati rice is commonly cooked in households local to where it is grown in the Indian subcontinent, its taste appeals to palates around the world far beyond where the grain originates from. Basmati rice is popular due to its following qualities:

• Its long grains
• Its distinctive texture
• Its rich fragrance
• Its nutritious content

There are many brands that are associated with Basmati rice and Amira Basmati Rice is one of the leading names in the industry. The company, which is chaired by Karan A. Chanana, provides Basmati rice in the international market across regions in The Middle East, North America, and Europe. What makes Amira Basmati Rice unique? Basmati Rice from Amira is only sourced from traditional rice-growing regions in the Indian subcontinent at the foothills of the Himalayan mountains, where the environmental conditions are optimal to cultivate Basmati rice of the highest quality. Amira Basmati rice is aged for up to a year before it enters the next stage of production. This allows its flavour and aroma to mature and flourish before the rice is prepared at a state-of-the art treatment plant that preserves its nutritional content before it is packaged and distributed for consumption. Amira selects Basmati rice for its long grains, rich aroma, exquisite taste and firm texture. The grains expand and stay separate when cooked, which creates a light and enticing appearance at the dinner table. It is the perfect basis for a traditional biryani or a contemporary pilaf and makes a versatile and nutritious accompaniment to almost any meal. Karan A. Chanana, Chairman of Amira Nature Foods Ltd has previously expressed his view that Basmati rice is a food staple that is inherent in culinary culture and a primary source of sustenance shared by people across many continents and all levels of society. Karan A. Chanana has a wealth of knowledge about the rice industry and has been interviewed by several mainstream media outlets in the past. With so many varieties to choose from and a rich history in the sourcing and provision of the finest Basmati rice, it is no wonder that Amira previously earned a trusted reputation amongst culinary connoisseurs all over the globe.

Pakistan’s Basmati rice exports grew by 8.97% month-on-month to $58.086 million in January 2022, as compared with $49.161 million in January 2021, WealthPK reported. The country’s overall monthly rice exports declined by 8.40% and remained at $220.078 million in January 2022 compared with $240.264 million in December 2021, according to Pakistan Bureau of Statistics (PBS). The country’s overall food group exports in January 2022 were $471.500 million as compared with $533.565 million in December 2021, showing a decrease of 11.63%, reported WealthPK. On a year-on-year basis, food group exports increased by 14.31%  

Among rice commodities, the exports of Basmati rice increased by 33.14 percent as these surge from $228.370 million last year to $304.043 million during the current year: PBS reported ISLAMABAD, Jan 24 (APP): The exports of rice surged by 10.73 percent during the first half of the current financial year (2021-22) as compared to the exports of the corresponding period of last year. Pakistan exported rice worth $1066.769 million during July-December (2021-22) against the exports of $963.379 million during July-December (2020-21), showing growth of 10.73 percent, according to the Pakistan Bureau of Statistics (PBS). Among the rice commodities, the exports of Basmati rice increased by 33.14 percent as these surge from $228.370 million last year to $304.043 million during the current year. The exports of other rice commodities also grew by 3.77 percent by going up from $735.009 million last year to $762.726 million during the current year, the PBS data revealed. In terms of quantity, the overall rice exports grew by 12.54 percent including Basmati rice by 47.39 percent and other rice commodities by 7.51 percent, the PBS data revealed. Meanwhile, year-on-year basis the rice exports witnessed an increase of 3.26 percent in December 2021 as compared with the export of the same month of last year. The rice exports in December 2021 were recorded at $240.260 million against exports of $232.676 million in December 2020. During the period under review, the exports of basmati rice increased by 54.25 percent , however, the exports of other rice commodities declined 4.82 percent. On month-on-month basis, the rice exports increased by 3.60 percent when compared to the exports of $231.908 million in November 2021. On month-on-month basis, the Basmati exports witnessed negative growth of 12.94 percent, however that of other rice commodities increased by 8.92 percent. The overall food exports from the country increased by 22.28 percent during the first half of current year compared to last year.  The food exports from the country were recorded at US $ 2482.704 million during July-December (2021-22) against the exports of US$ 2030.322 million during July-December (2020-21). It is pertinent to mention here that the overall exports from the country during the first half of current financial year witnessed an increase of 24.71% by going up to $15.102 billion as compared with the exports of $12.110 billion last year. The imports also registered about 65.94% growth as these went up from $ 24.454 billion in 1st  half of the last year to $40.580 billion during current year, the PBS data revealed.

According to weekly SPI, basmati (broken, average quality) national average price has closed in on Rs 100 per kg in the week ended 09th December. Although price of basmati varieties can reach up to Rs 250-300 per kg – depending upon quality – this is the first time SPI price has scored a century. Is a basmati price spiral next? Not really. It is correct that basmati prices (as tracked by SPI) have increased by nearly 60 percent in the past 5 years that says little in an economy where currency itself has depreciated by over half during the same period. But FY21 marked the highest rate at which basmati prices have raised in nearly a decade, while FY22 may prove worse still. According to PBS data, basmati prices rose by 10 percent during FY21 over the preceding year (12-month average). Since July alone, prices have risen by 6 percent, and even if they stabilize at current level for H2-FY22 – the 12-month average run rate will translate into 11.5 percent by end FY22. But that’s not crazy enough in the world of domestic food prices, where prices of other staples such as wheat flour, ghee, cooking oil and sugar have risen by over one-third in less than a year (and in some cases, witnessed double-digit increase for two years in row). What’s crazy however is basmati price increase also flirting with double-digit territory, since in more recent past these had stood out for their relative calm and semblance of stability. What has happened? First theory is a grain miller’s favourite, and takes a leaf from Econ 101. Essentially, it posits that wheat and other cereals are substitute goods – not only in human consumption but also as livestock feed inputs. Thus, increase in price of one commodity leads to rise in price of others, especially when quantum of price increase is inordinate, as has been the case with wheat flour prices domestically.

Of course, outside of classroom, the real world does not operate under ceteris paribus conditions. Over the past decade, while Pakistan’s wheat and flour output has stagnated, production of basmati and related varieties (such as Kainat) has doubled. Meanwhile, uncompetitive pricing meant Pakistan’s basmati could find few takers in the international market, meaning there simply was a lot more rice to fill the stomachs back home. Greater output together with reduced export of marketable surplus meant that local prices remained stable, even when prices of other food commodities started to give in under the weight of rising cost of inputs. But it seems that the precarious equilibrium is now giving away too, a confluence of variety of forces. First, cost of production of basmati and other rice varieties has risen in tandem with other grains. According to Punjab government, cost of per acre production for basmati paddy rose by over one-third in the past two seasons alone, without commensurate increase in market prices. Two, output growth rate is now peaking, as growers have failed to note quantum jump in per acre productivity. Moreover, rice crop may very well have witnessed maximum area under its cultivation during the just concluded kharif season, as some growers may shift back to cotton in the upcoming season, due in part to demand revival from textile exporting industry. Lastly, demand for basmati exports is staging a comeback too, flirting with peak pre-Covid volume (witnessed in FY19). It appears likely that local basmati prices may witness upward momentum in coming months, especially if local wheat output falls short of target/expectations. Is there any saving grace then? Maybe, but only to the extent that consumers may feel assured that basmati prices shall not witness a topsy-turvy rollercoaster ride – unlike sugar and flour prices – and may instead only inch forward – albeit slowly. But that’s primarily an outcome of the very large number of small and mid-sized rice millers and shellers in the market, ensuring that none of the market participants command a dominant position in local trade. But that’s no thanks to administrative interference. Rice – and especially basmati market – has remained free of administrative intervention in the past, and must remain so regardless of which ever way prices might settle. In the medium term, however, policymakers must confront the existential dilemma of building forex reserves on raw material exports. Commodity exports may very well offer the fastest route to growing foreign trade, but sooner than later economies run out of marketable surplus if they fail to improve productivity. While rice crop may have done tremendously well compared to wheat or cotton in recent years, it is not free of the low (and stagnating) yields scrouge that inflicts agriculture sector in general.

India applies for exclusive trademark that would grant it sole ownership of basmati title in European Union, setting off a dispute with rival Pakistan. From biryani to pulao, Pakistan and India’s shared culinary landscape is defined by basmati, a distinctive long-grain rice now at the centre of the latest tussle between the bitter rivals. India has applied for an exclusive trademark that would grant it sole ownership of the basmati title in the European Union, setting off a dispute that could deal a major blow to Pakistan’s position in a vital export market. “It’s like dropping an atomic bomb on us,” said Ghulam Murtaza, co-owner of Al-Barkat Rice Mills just south of Lahore, Pakistan’s second-largest city. Pakistan immediately opposed India’s move to gain Protected Geographical Indication (PGI) from the European Commission.

India is the largest rice exporter in the world, netting $6.8bn in annual earnings, with Pakistan in fourth position at $2.2bn, according to the United Nations figures.

The two countries are the only global exporters of basmati. “(India) has caused all this fuss over there so they can somehow grab one of our target markets,” said Murtaza, whose fields are barely five kilometres (three miles) from the Indian border. “Our whole rice industry is affected,” he added.

From Karachi to Kolkata, basmati is a staple in everyday diets across southern Asia.

It is eaten alongside spicy meat and vegetable curries, and is the star of the endlessly varied biryani dishes featured at weddings and celebrations across both countries, which only split following independence from British colonial rule in 1947. They have since fought three full-scale wars, with the latest skirmish in 2019 involving the first cross-border air attacks in nearly 50 years. Diplomatic relations have been tense for decades and both countries routinely attempt to malign each other on the international stage.

‘Very important market’

Pakistan has expanded basmati exports to the EU over the past three years, taking advantage of India’s difficulties meeting stricter European pesticide standards.

It now fills two-thirds of the region’s approximately 300,000-tonne annual demand, according to the European Commission.

“For us, this is a very, very important market,” says Malik Faisal Jahangir, vice-president of the Pakistan Rice Exporters Association, who claims Pakistani basmati is more organic and “better in quality”. PGI status grants intellectual property rights for products linked to a geographic area where at least one stage of production, processing, or preparation takes place.

Indian Darjeeling tea, coffee from Colombia and several French hams are among the popular products with PGI status.

It differs from Protected Designation of Origin, which requires all three stages to take place in the concerned region, as in the case of cheeses such as French brie or Italian gorgonzola. Such products are legally guarded against imitation and misuse in countries bound by the protection agreement and a quality recognition stamp allows them to sell for higher prices. India says it did not claim in its application to be the only producer of the distinctive rice grown in the Himalayan foothills, but attaining PGI status would nevertheless grant it this recognition.