Financial Daily from THE HINDU group of publications
Monday, Nov 08, 2004
Agri-Biz & Commodities
Basmati turns costlier on fears of output fall
Chennai , Nov. 7
THE fragrant basmati rice may turn out to be costlier this season. That is because basmati paddy prices are up by 15-30 per cent on fears of a fall in production.
"Basmati paddy prices are up for a couple of reasons. One, delayed rain has led to fall in acreage. Farmers did not plant paddy as they did not have good irrigation. Two, rains during harvest time are feared to have affected the crop," said trade sources.
Currently, basmati paddy is being quoted at a minimum of Rs 1,150 a quintal, up Rs 200 over the price during the same period a year ago. Some trade sources said prices for even pusa basmati had increased by Rs 300 a quintal to Rs 1,100 compared with prices last year.
Reports from Haryana say there has been partial damage to the crops in Karnal area.
"Certainly, there has been crop damage in the growing areas during harvest time. That has led to rise in prices," said trade sources. "This has resulted in prices rising by Rs 2,500-3,000 a tonne," they said.
According to the trade, the area under basmati has declined this year by 10-12 per cent.
Estimates have put the production at around eight lakh tonnes against the normal nine lakh tonnes. Of this, over six lakh tonnes are exported.
"Prices are definitely looking higher for basmati. But it is good that they are up at the beginning of the season because farmers stand to benefit," they said.
Though trade sources say it is too early to assess the impact of the price rise, exporters feel it could dampen shipments from the country to some extent.
"Exports may be affected but it also hinges on crop in Pakistan," an exporter said. "Moreover, if the prices are going to be higher then importers will cut their inventories. That, to some extent, could impact exports," they said.
An exporter, however, said buyers were expected to be in the market after Ramzan and until then, it would be too early to make any assessment on exports.
Trade sources said arrivals had begun but it was looking to be normal. "There are other factors that will come into play this year. For example, the European Union has decided to allow free import of basmati. Pusa basmati, in particular, will stand to benefit," exporters said. The EU buys about 1.25 lakh tonnes of basmati from India every year.
During the last fiscal, basmati exports declined marginally to 7.07 lakh tonnes valued at $442.43 million against 7.08 lakh tonnes worth $432.45 million the previous year.
Currently, Indian premium basmati is quoted at $850 a tonne, while brown basmati at $675. Pusa basmati rules at $450 a tonne. On the other hand, Pakistan basmati is quoted lower than Indian basmati by over $100 a tonne.
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