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Basmati paddy prices in Uttar Pradesh are nearly 60 per cent higher and over 20 per cent more than a year ago in Haryana as new crop has started arriving in mandis amid an increased overseas demand.
But, the country may miss the opportunity if the government does not put any minimum export price as some exporters may try to lower the rates to turn competitive, say experts.
The average price realisation from basmati exports was $1,078 a tonne in July as shipments were at 0.38 million tonnes (mt) worth $410 million, according to APEDA data. Currently, exporters are said to be contracting deals at $1,250-1,350 a tonne, trade sources said. In August, shipments of the aromatic variety were at 0.33 mt — up 23 per cent from the year-ago period.
On September 14, the Commerce Ministry released export data for August showing rice shipments at $1,041.72 million against $725.45 million year-ago.
On the other hand, Pusa Basmati 1509 variety is selling at ₹3,340/quintal in mandis in Haryana’s Kurukshetra district, which is up from ₹2,710 a year ago and the same variety is selling at ₹3,650 against ₹2,320 in Aligarh, Uttar Pradesh, according to Agmarknet portal.
“July was at the peak and many consignments were contracted at $1,250/tonne towards the end of the month. We are waiting for clarity to emerge in the next 20 days as the crop has just started arriving in some areas. But one thing is clear: Basmati opened at ₹2,700 and went up to ₹4,000 last year due to a lower crop. Since it has opened at about ₹3,000, we are not sure how the prices will move over the next three months,” said a leading exporter.
He said the old crop usually commands a higher price than the new crop and if exporters are striking deals at $1,350 per tonne, it could be last year’s stocks or even the year before that. The industry is divided on the basmati crop output since the overall acreage of paddy (both basmati and non-basmati) is down from last year levels in Uttar Pradesh.
Acreage flat
The acreage is flat in Punjab and higher by nearly one lakh hectares in Haryana. While basmati is grown in all districts of Haryana and Punjab, it is grown in 30 of the 75 districts in Uttar Pradesh. These three districts have a 95 per cent share in the total area under basmati, estimated at 16,31 lakh hectares in 2022.
“Considering the fact there is no physical inspection in basmati rice exports, the high-priced non-basmati varieties, could be labelled or declared as basmati for export purposes. Such a move will make the export duty meaningless and get miraged inside the label basmati,” said foreign trade policy expert S Chandrasekaran. He also said the fly-by-night operators could exploit this situation to gain profit, which may bring down basmati rice prices in overseas markets.
“In order to prevent such a possibility in basmati rice exports, it is important to set a floor price, which will also facilitate to sustain higher basmati paddy prices and boost the farm income,” Chandrasekaran said citing such a policy precedence was seen on past three occasions. The government last week imposed an export duty of 20 per cent on non-basmati rice (except parboiled rice) and banned shipments of broken rice.
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