According to estimates, Basmati Rice production set to increase this year due to bumper crop. However, the increased production put farmers and exporters in a fix due to low demand and prices. Prices and export of basmati rice to depend on policies of foreign countries like Iran and Saudi Arabia.
High production of Basmati Paddy
Basmati cultivation is at its peak this year with Punjab and Haryana contributing high production. According to a report by ICAR, India is in on the verge of attaining its highest export of Rs. 30,000 crores in 2019. Analysts confirm that the momentum of the present fiscal is likely to permeate into the following year’s fiscal. Moreover, Basmati paddy prices have been increasing for 3 years. Thus, improving the country’s economy.
Further, the production has increased despite few challenges that surfaced this current year. The stringent pesticide norm by EU, payment issues from Iranian importers and uncertainty faced due to impositions on Iran were the few challenges.
Saudi Arabia Pesticide Residue
The EU set MRL (Maximum permissible residue level) values of fungicides and pesticides. As a result, Saudi Arabia rejected a few shipments of Indian rice. Additionally, Saudi Arabia has instituted new requirements that demand DNA testing of basmati with up to 93% purity. This change has globally dropped our export of basmati rice to many countries. Since then authorities have convinced farmers to lower pesticidal use. AIREA was advised to send a list of pesticides that would be in terms of MRL regulations of the EU and Saudi.
Iran Issue
Iran imports more than 1 million Tons of basmati rice from India. However, import may decline due to crude oil exports from Iran being clamped down by US sanctions. Consequently, over 150,000 tonnes of consignments held up at Iranian ports since June. The bilateral India-Iran trade system was broken. Causing a major drop in sales for the initial 4 months of the year. Apart from financial difficulties raised due to blockage of funds, allotment of credit from banks to Iranian importers has stopped. Thus, the exports reduced from 0.4 million tonnes to 13,000 tonnes by August 2019. Additionally, causing a drop-in basmati prices by 6 rupees a kg earlier in July 2019.
In the meeting held on 14 October, the commerce secretary addressed both issues with Iran and Saudi. Advised members to take back consignments from Indian ports and avert them to the domestic market. Further, he suggested diverting the consignments stuck in the Iranian ports to other destinations.