Basmati rice: Pakistan clocks better exports growth than India this fiscal

Subramani Ra Mancombu | | Updated on: Feb 24, 2022

New Delhi unable to meet EU pesticide norms, Iran payment woes weigh in

While India’s basmati exports have dropped by nearly 19 per cent during the April-December period of the current fiscal, Pakistan’s shipments have increased by over 28.5 per cent between June and December 2021.

However, All India Rice Exporters Association (AIREA) executive director Vinod Kaul says the pace of the fall in fragrant rice exports dropped in December 2021. Exports of the long-grained rice will be buoyant  in the current quarter. 

Pak’s better growth

According to Agricultural and Processed Food Products Export Development Authority (APEDA) data, basmati exports during April-December 2021 declined to 27.45 lakh tonnes (lt) valued at $2,382 million against 33.81 lt valued at $2,947 million in the year-ago period.

Pakistan’s basmati exports are lower in volume than Indian shipments. Still, it exported 4.14 lt of basmati during June-December period of the 2021-22 fiscal (Islamabad’s financial year is from June to May), up 28.58 per cent compared with 2.93 lt. 

Its exports value are also lower than India’s. But trade analysts and experts point to the growth that Pakistan has achieved compared with the drop registered by India. 

Also, Pakistan’s share in the EU rice market increased to over 25 per cent last year compared with India’s 16 per cent. Recent data are pointers to Islamabad strengthening its hold. 

‘No match for India’

“Pakistan sells a lower volume of basmati compared to India. Therefore, it is nowhere compared to India, said Vijay Kumar Setia, former AIREA president and chairman, Chaman Lal Setia exports. Pakistan exports 5-7 lt of basmati annually.

“Our basmati exports will be close to last fiscal’s level of 46.30 lt. Last fiscal, despite Covid, we exported higher than the 44.54 lt achieved during 2019-20,” Kaul said. 

However, the value of exports dropped last fiscal to $4.01 billion against $4.37 billion the previous one. 

Kaul and analysts point to two reasons for the drop in basmati exports, particularly to the EU. One is that Pakistan gains in the European Union as it enjoys an advantage. This is because the EU extends the general system of preference in trade to it. 

Saving crop from humidity

“The other reason is India is now facing the problem of pesticide residues in basmati in the EU and West Asia,” an industry expert, who did not wish to be identified, said. 

Kaul said Pakistan farmers seem to be using less pesticide given the climatic differences. “Farmers there also face water shortage,” he said. 

The expert said India had lost market substantially in the European Union mainly due to tricyclazole residue. In view of groundwater levels dropping alarmingly in Punjab and Haryana, farmers in those States are not allowed to sow paddy before June 1.

As a result, the plant grows during humid weather, making the crop suspect to fungal attack. This forces farmers to use the chemical to control the fungus.

Talks with EU

Tricyclazole is a fungicide used for controlling leaf and panicle blast in paddy. The formulation is banned in the European Union. The fungicide is absorbed quickly by the paddy plant, which helps it overcome fungal attacks on the plant.

Shipments to West Asia have also been affected as countries in that region have begun to adopt the EU pesticide residue norms.

Union Minister for Agriculture and Farmers’ Welfare Narendra Singh Tomar discussed the issue with EU officials last July. He told them that the lower residue level affected Basmati exports from India, as Brussels has lowered the permissible level of tricyclazole in rice shipments.

Tomar told EU officials that the lower MRL for tricyclazole affected Indian exports of Basmati rice to Europe. A statement issued after the meeting by India said the issue would be resolved by June this year. 

Oil-For-Food

The other issue that has affected basmati exports is lower imports by Iran. “Iran is facing a huge problem of inflation. Its citizens find basmati rice is costly. As a result, it has suffered,” said the expert.

AIREA’s Kaul said Iran had to cut the purchase of Indian basmati since the swap under the oil-for-food programme was no more available. This is because India stopped importing crude from Iran from May 2019. “Till that time, the funds (in the escrow account deposited by India for the crude oil it bought) took care,” he said. 

Iran’s share of Indian basmati exports was 34 per cent until then. However, talks between Iran and the US on a nuclear agreement offers hope for India. 

With Russia facing sanctions from the US and allies, the nuclear agreement could be prioritised to ensure the world does not suffer from crude oil shortage due to the sanctions.

Published on February 24, 2022
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