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Non-basmati rice exporters see EU market opening up

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Fallout of US shipping rice with traces of GMO

Harish Damodaran

New Delhi, Nov. 2

After basmati, it is the newly created market for non-basmati rice in Europe that is exciting the country's Rs 7,000 crore-plus rice exporting industry. This follows a virtual ban on imports of rice from the US by the European Union and Japan since late August, when shipments of the Arkansas-based Riceland Foods Inc were officially confirmed to have contained traces of an unauthorised genetically modified strain, Liberty Link-601.

`Lot of enquiries'

"We have been getting a lot of enquiries in the last couple of weeks from European buyers. That promises good times ahead," said Mr Gurnam Arora, Joint Managing Director of Kohinoor Foods Ltd. The EU annually imports roughly three lakh tonnes (lt) of long-grain rice from the US, which is a quarter of its total purchases of 11-12 lt. Besides, it buys around 2.75 lt from India and Pakistan, one lt from Thailand and the rest from assorted suppliers such as Guyana and Surinam.

The bulk of Indian rice exports, however, consists of brown basmati. Between 2002-03 and 2005-06, the country's basmati exports to the EU has increased from 1.82 lt to 2.20 lt, even as shipments from Pakistan have fallen from 0.95 lt to 0.53 lt.

Shifting focus

"So far, it was mainly basmati and a few containers of non-basmati. Now, we can fill a large chunk of the three-lt market for long-grain rice vacated by the US through non-basmati. Our rice is not only GM-free, but also free from the aflatoxin problem plaguing Pakistani exporters," said Mr R.S. Seshadri, Director of Tilda Riceland Ltd.

In fact, since early-2006, companies such as Amira Foods and Sunstar Overseas have already been sending vessel full of non-basmati rice to the EU. "The timing of the ban on GM rice couldn't have been better. It is like the icing on the cake," said Mr Karan Chanana, Managing Director of Amira Foods (India) Ltd, which has so far shipped out 30,000 tonnes. While exports were mostly going to the erstwhile socialist bloc, the market could now expand to the mainland as well.

"The rice that is going is mainly IR-36 and IR-8, which fit the long-grain category," Mr Chanana added. Indian non-basmati is selling at about $300 per tonne cost & freight in Europe, which would be at a $50-60 discount to US long-grain rice. Milled basmati fetches as high as $ 900 a tonne.

During the year ended March 31, 2005, the country's total export of non-basmati rice stood at 39.05 lt (valued at Rs 4,144.03 crore), with basmati accounting for 11.61 lt (Rs 3,030.32 crore).

(This article was published in the Business Line print edition dated November 3, 2006)
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