Farmers unlikely to raise basmati acreage

Unlike last year, basmati farmers are unlikely to increase acreage this year owing to low international demand. In 2014-15, the area under cultivation was 2.1 million hectares, with a production of 8.3 million tonnes of basmati rice. "Based on our interaction with farmers, this year there will be no increase in acreage. However, we get to know the final data only by the end of July," said Rajen Sundaresan, executive director, All India Rice Exporters' Association.

In 2014-15, farmers earned Rs 2,300-2,500 per quintal against Rs 3,500-4,000 per quintal in 2013-14. Iran is the largest buyer of Indian basmati rice. According to basmati rice traders, from an average monthly shipment of nearly 100,000 tonnes two years ago, the current basmati rice export to Iran is not more than 70,000 tonnes a month. In tandem, the prices of basmati rice have fallen from Rs 80,000 a tonne two years ago to Rs 52,000 a tonne at present.

"Iran has been citing reasons such as quality, high pesticide content factors like sufficient stock for reduced imports. This has led to an unprecedented fall in prices in the domestic market. We have already made several requests to the government to sort out the matter," said M P Jindal, president, All India Rice Exporters' Association.

"The latest data show that in April 2015, exports were down by 10,000 tonnes over April 2014," said Sundaresan.

According to the Food and Agriculture Organization's biannual report on global food markets, in 2015-16, Iran's total cereal imports is forecast to be 14.7 million tonnes against 15 million tonnes in 2014-15.

In 2014-15, India exported 0.93 million tonnes of basmati rice to Iran compared with 1.4 million tonnes in 2013-14, according to Agricultural and Processed Food Products Export Development Authority. The realisation from basmati rice exports to Iran in 2014-15 was Rs 6,759 crore, against Rs 10,976 crore in 2013-14 - a fall of nearly 60 per cent. On account of sanctions on Iran, payments for exports to Iran are settled in Indian currency through a rupee-trade mechanism facilitated by UCO Bank.

In 2014-15, India's total exports to Iran were valued at $4,175 million, 16 per cent down over the previous year. About 80 per cent of India's agriculture and processed food exports to Iran are on account of basmati rice.