Basmati prices decline 25% in Punjab

Tepid response from rice millers; several farmers had gotten into Basmati

The prices of Basmati rice have fallen in Punjab this year by 20 to 25 per cent as compared to those of kharif 2013 due to a tepid response from rice millers at the beginning of the season.

Last year, major basmati varieties such as Pusa 1509 and Pusa 1121 were purchased at Rs 3500 to Rs 4,000 a quintal. The increase in demand and price of basmati was triggered by the high export demand for Indian basmati the world.

Driven by the lucrative price, farmers in Punjab adopted diversification from non-basmati into basmati, which is also supported by the state government under the diversification of agriculture plan.

The projected increase in the area under basmati is 8 to 10 per cent. Because of the dwindling water table in Punjab, farmers are encouraged to diversify from non-basmati to basmati, as it requires lesser irrigation. The Punjab government also offers certain concessions to Punjab-based millers for lifting basmati paddy as this crop is not included under the minimum support price regime.

This year though, millers are skeptical of international demand and are not lifting the crop at a rapid pace.

A revision of import duty on basmati by Iran proved a dampener for basmati exporters and they are stocking the crop in lesser volumes.

The expectation of a glut in the market due to increased acreage had also slowed the buying operations of the millers. The crop would be arriving in full swing in mid-October and that might result in further fall in price.

"A below-average rainfall had already added the cost of irrigation for paddy and a lower remuneration would put us in a precarious situation," said Balbir Singh, a farmer from Sangrur.

He said millers had created a cartel and had deferred buying as they knew the crop size was larger than last year and farmers did not have enough storage space. We cannot negotiate for a higher price, he said.

PRICE SLIDE
n Price have been fallen by 20-25 per cent compared to last year
n The major basmati varieties of Pusa 1509 and Pusa 1121 were purchased at Rs 3,500 a quintal to Rs 4,000 a quintal last year
n High export demand has contributed to the higher basmati price
n The Punjab government offers certain concessions to the millers for lifting basmati paddy as this crop is not included under minimum support price regime