Basmati export price realisation loses flavour.

New Delhi: India's average price realisation through basmati (aromatic) rice exports have dropped by almost $150-200 per tonne in 2009-10, but exporters are not complaining as total volume has seen a rise around 44% between 2008-09 to 2009-10.

The high premium commanded by Indian basmati rice in 2009-10 has also queered the pitch for increasing the government fixed minimum export price (MEP), which presently stands at $900 per tonne.

Currently, Indian basmati rice is selling at around $ 900 -1,800 per tonne in the global markets.

“At present, we are getting an average price realisation of $1,150 per tonne,” Vijay Setia, president of All India Rice Exporters Association (AIREA) told FE.

Setia said that due to global shortage of rice last year, price realisation for basmati was around $1,300 a tonne, which this year has come down by almost $150-200 per tonne, but volumes have gone up substantially.

For ensuring that Indian basmati rice remains 'competitive' in the global markets, the government had reduced the MEP on basmati by $200 a tonne to $900 a tonne in September, 2009.

Pakistan, India's only competitor in the global basmati markets does not have any concept of minimum export price. “The investments made in improving quality of rice have generated consumer demand for Indian basmati rice abroad, which is now translating into higher premium,” Setia said.

Basmati rice exports from Indian have been rising steadily in the last few years, largely after government classified PUSA 1121 variety into the basmati category. The demand has come largely from Middle East countries, with Iran contributing almost 50% to the demand.

The Agricultural and Processed Food Products Export Development Authority (Apeda) analysis has pegged total basmati exports at 2.3 million tonne in 2009-10.

Setia is optimist that the figure would cross 2.5 million tonne in 2009-10 itself after commerce ministry releases its final official figures. “We expect many more Middle East countries to accept 1121 variety of basmati rice during the next few years,” Setia, who is also managing director of Chamanlal Setia Exports said.

According to the latest data compiled by Apeda, exports of the premium aromatic rice has increased by an impressive 44% to 2.3 million tonne in comparison to 1.6 million tonne reported during 2008-09.

In value terms, export of basmati rice has crossed Rs 12,000 crore last fiscal against Rs 9,476 crore achieved during 2008-9, which has the enabled the country to recoup bulk of the Rs 7,000 crore annual loss that it is suffering because of the ban on non-basmati rice.

Source : Financial Express