NEW DELHI -- India's basmati rice exports have fallen by around a third in the year to March 2009, swelling carryover stocks as the global slowdown lowered demand, industry officials said.
"Basmati exports will touch about 1.1 million to 1.2 million metric tons," in the year that ended Tuesday, Vijay Setia, president of the All India Rice Exporters Association, told Dow Jones Newswires.
He estimated the basmati rice exports in 2007-08 at between 1.7 million and 1.8 million tons.
The government scrapped its export tax on the rice variety in January, but the floor price of $1,100/ton for exports was still too high to compete with rival producers like Pakistan, whose produce was priced about $200/ton lower.
India had responded to high prices earlier by imposing a ban on exports of non-basmati rice, while imposing on basmati rice a floor price for exports and an import tax of 8,000 rupees($158.4)/ton, but good crops and lower global prices have since led to the easing of some the restrictions.
Indian rice exporters have been lobbying for a reduction in the floor price for basmati exports to about $900/ton, with support from the Ministry of Trade.
But a high-ranking ministerial panel meeting last month did not approve the proposal, despite a likely increase in carryover stocks for basmati rice from the year ended March 31 by five times to 2.5 million tons, from 500,000 tons a year earlier, Mr. Setia said.
The country is also expecting to reap a record rice harvest of about 99 million tons in 2009, further increasing reserve stocks as overseas demand is likely to remain weak.
"Overall demand is sluggish because the main markets for basmati - the Middle East, Europe and the U.S. - are all badly affected by either oil prices or by financial crisis", said R.S. Seshadri, director of Tilda Riceland, the country's largest basmati exporter.
He said the Pusa 1121 variety, a superior-quality aromatic rice rebranded as basmati late last year with an eye on exports, has found hardly any overeas buyers.
"Pusa 1121 is a huge problem. There are usually no carryover stocks," but this year stocks will be very large, Mr. Seshadri said.
As of March 1, India had stocks of 21.26 million tons of rice and 15.28 million tons of wheat. Stocks of the Pusa 1121 variety alone are currently estimated around 700,000 tons.
State-run companies bought 22.6 million tons of wheat and 28.49 million tons of rice in 2008, and purchases will be about the same this year, a spokesman of the state-run Food Corp. of India said.
Source : The Wall Street Journal