Basmati prices rule high for the new crop

Smiles are back on the faces of basmati growers in Punjab and Haryana, as prices of the new crop, Pusa 1121, have surged 20-25 per cent.

In view of the surge in exports and attractive rupee exchange rate, basmati exporters have increased the remuneration to farmers.

The comparatively lesser carry-forward stock with exporters and higher dollar prices this year compared to last year helped farmers get more, said Sushil Kumar Jain, president, Haryana Rice Exporters Association.

According to exporters, prices for the Pusa 1121 variety this year are Rs 2,100-2,300 a quintal as against Rs 1,700 a quintal last year. Pusa 1121 is the main basmati variety grown in Punjab and Haryana, comprising around 75 per cent of the basmati area. Punjab and Haryana account for about 80 per cent of basmati production in the country.

Rajeev Setia, executive director, Chaman Lal Setia Exports, says higher prices of the new crop are mainly on account of ‘over-depressed prices’ of last year. Last year, Pusa 1121 had gone down to Rs 1,500 a quintal.

The crop size this year is projected to be slightly down, compared to last year, according to M P Jindal, president of the All India Rice Exporters’ Association. “Last year, the crop size was 150 million bags. This year, the size would be six per cent less, owing to decline in the area under traditional basmati,” he said.

According to Jindal, this year’s basmati exports will be 25 per cent more than last year’s. His estimate is that basmati exports this year would be around 4 million tonnes, compared to last year’s 3.2 million tonnes.

Exporters say that the higher export projections achievement would depend on Iran market. They point out that the demand from Iran could set the tone for basmati prices in the domestic market in the medium- and long-term.

Liquidity in the Iran market would set the tone for basmati prices in next 3-5 months, says R S Seshadri, general-secretary, Airea.

Out of India’s total basmati exports of about 3 million tonnes, 1.1 million tonnes go to Iran.

However, the US sanctions that prohibits Iran from trading in dollars has affected India’s rice exporters in big way.

Jagdish Suri, another rice exporter, says that whether the basmati prices would continue to rule high or low would depend on the Iran market. “If Iran is the buyer(for basmati), prices would increase, if not, they will come down in longer term.”