Supported by higher paddy prices and resumption of imports by Iran, the basmati rice industry looks ahead to attractive growth in 2017-18, aided by export volume growth.

Ratings agency ICRA has estimated the export volumes in 2016-17 to be around 4 mt (about the same as in 2015-16), but lower realisations may keep the value of the exports lower at around ₹21,000 crore for 2016-17, against ₹22,718 crore in 2015-16.

“In fiscal 2017-18, the value of exports is expected to grow to ₹22,000-22,500 crore, with export volumes growing to around 4.09 mt and supported by an increase in average realisations. Resumption of imports by Iran will be keenly watched by the industry as it has the potential to provide an impetus to exports,” said Deepak Jotwani, Assistant Vice-President, ICRA, in a press release.

According to ICRA, the industry has witnessed moderation in recent years on the back of subdued international demand, owing to the delay in resumption of imports by Iran.

ICRA expects domestic demand to grow consistently, with companies expected to report 2-3 per cent growth in revenues and around 0.5-1.0 per cent growth in profitability.

After peaking at ₹29,300 crore in fiscal 2013-14, the value of basmati rice exports has fallen. However, volumes grown in recent years.

Average realisations fell from a high of ₹77,988 per tonne in 2013-14 to ₹56,149 per tonne in 2015-16 and further to ₹52,906 per tonne in the first 10 months of fiscal 2017.

In 2017-18, the industry is expected to benefit from rising paddy prices. After declining considerably during the procurement season in fiscal 2015-16, basmati paddy prices have firmed up by 20-25 per cent across various varieties in the October-December 2016 procurement season, primarily due to relatively lower production.

This is likely to push up basmati rice prices in the next financial year, noted ICRA.

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