The Hindu Business Line : Non-basmati rice prices crash on export ban

Bearish sentiment
Prior to the ban, Pusa-1121 was fetching $1,350-1,400/t f.o.b, higher than the $1,250-$1,300 for traditional varieties.
Around 50% of the area under basmati has been sown under Pusa-1121, with CSR-30 accounting for 25%.

Harish Damodaran

New Delhi, Oct 16 The Centre’s ban on export of all non-basmati rice has led to a crash in prices of premium aromatic varieties, such as Pusa-1121, which are still to be officially notified as ‘basmati’.

Since October 9 – the day the decision was taken by the Cabinet Committee on Economic Affairs (CCEA) – prices of Pusa-1121 paddy in major mandis of Haryana have fallen from around Rs 2,040 to Rs 1,900 a quintal. Harvesting of the other premium non-notified variety – CSR-30 – is yet to start, with market arrivals slated from the first week of November.

Bearish sentiment

“The sentiment is bearish and will turn more so, now that the ban has been officially notified,” trade sources said.

The Directorate General of Foreign Trade (DGFT), on Monday, issued the notification placing non-basmati rice under the “not permitted to be exported” category with effect from October 9.

Area under non-basmati

During 2006-07, the country officially exported 10.41 lakh tonnes (lt) of basmati rice, valued at Rs 2,778.31 crore, with the corresponding figures for non-basmati being 37.05 lt and Rs 4,257.88 crore. The irony is that this time around 50 per cent of the country’s area under basmati (if one may call it so) has been sown under Pusa-1121, with CSR-30 accounting for another 25 per cent. That leaves just 25 per cent under officially notified basmati varieties, including Pusa Basmati-1 (20 per cent) and traditional tall cultivars (5 per cent).

“If the ban is rigorously implemented, there will be a more than three-fourths drop in basmati exports. For farmers, the ban on non-basmati exports along with the delay in notifying Pusa-1121 and CSR-30 would be a double-whammy,” the sources noted.

Yields higher

Farmers in Punjab, Haryana and Uttar Pradesh have taken a fancy to Pusa-1121 and CSR-30, both in view of higher yields as well as remunerative prices. Pusa-1121 yields roughly 19-20 quintals an acre, against 20-21 quintal for Pusa Basmati-1, 14-15 quintals for CSR-30 and 9-10 quintals for traditional varieties such as HBC-19 (Taraori). In the past couple of years, the trend has been to replace Pusa Basmati-1 with Pusa-1121 and HBC-19 with CSR-30.

“The grain from 1121 has better aroma and lower chalkiness than Pusa Basmati-1, while yields are more or less the same. CSR-30 has higher yields and is salinity resistant compared to traditional cultivars, with very similar grain quality. A lot of CSR-30, in fact, gets shipped out as traditional basmati,” the sources added.

As per a survey of basmati area done by Birla Technical Services for the Commerce Ministry in 2006, the area under CSR-30, at 81,093 hectares, was twice that for HBC-19, at 40,635 hectares. The current year would have seen a further shrinkage under traditional varieties.

Price trend

Prior to the export ban, Pusa-1121 was fetching $1,350-1,400 a tonne free-on-board, which was higher than even the $1,250-1,300 for traditional varieties and CSR-30, and $1,150-1,200 for Pusa Basmati-1.

“We are now in a strange situation where export of premium quality rice, commanding higher prices than traditionally grown basmati cultivars, is banned. The ultimate sufferer will be the farmer, who, unlike the miller/exporter, cannot hold on to his crop till the ban gets lifted,” the sources said.