INTERVIEW: Export body sees India’s basmati shipment unchanged FY19

Thursday, Dec 6
    By Shilpa Sharma
    NEW DELHI – India will export 4 mln tn of basmati rice this fiscal, nearly same as last year’s 4.1 mln tn, even as production is seen falling 5-7% on year, A.K. Gupta, director, Basmati Export Development Fund, an arm of Agricultural Products Export Development Authority said.
    “Exports could have been higher but for lack of availability,” Gupta told Cogencis in an interview.
    In value terms, however, basmati exports are seen growing 5% due to a weak rupee, Gupta said.
    In 2017-18 (Apr-Mar), India’s basmati exports were valued at 268.70 bln rupees, according to data from APEDA.
    Export prices are seen on the higher side through the year because of a fall in India’s basmati output.
    In a typical scenario, exports would have taken a hit because of higher prices, “but since India is the world’s top exporter this should not be a problem. Pakistan is a distant second,” Gupta said.
    The rupee has depreciated about 7.5% since April to around 70.90 a dollar as of now.
    India’s basmati exports to Iran are seen rising in the coming months as the US may exempt New Delhi from its sanctions on the west Asian country. However, exports are unlikely to see a significant jump because of lack of huge exportable quantities.
    Iran is one of the key traditional buyers of Indian basmati rice.
    What will also keep a lid on exports are stringent norms on residual limits that have been adopted by the European Union and have hit India’s exports to the region since January, Gupta said.
    India’s basmati exports to EU were suspended after the bloc reduced permissible limit of tricyclazole residue in imported rice to 0.01 part per mln from 1 part per mln, effective Jan 1.
    Though, European Union accounts for 8-10% of India’s basmati exports, its strict stance over residual limits hit shipments to other importing nations as well.
    Following in the footsteps of European Union, Saudi Arabia tightened residual limit norms for import of rice from India. As a result, India’s basmati exports to Saudi Arabia hit a roadblock in June, when the kingdom implemented the stringent norms of maximum residual limit.
    Saudi Arabia, Iran and United Arab Emirates are the top three buyers of Indian basmati and together account for 70-80% of India’s exports.
    Saudi Arabia has its own residual norms, but chemicals for which they do not have a policy in place they rely on the European Union and the US, Gupta said.
    “Saudi Arabia has (now) agreed not to follow the EU norms blindly, and would look at it on a case-by-case basis,” Gupta said. “I can say tricyclazole is (now) not an issue in Saudi. EU is strict about it…if that is settled we would have relief. We are following it up with the EU.”
    A fall in output would also mar India’s export prospects.
    The agency has pegged India’s basmati rice output in 2018-19 (Jul-Jun) at 5.31 mln tn, around 6% lower on year.
    The fall in output can be attributed to the shift in acreage to non-basmati rice and late rains in September, which may have hurt yields, Gupta said.
    Basmati growers shifted to non-basmati varieties following an increase in the government-mandated minimum support price, he said.
    Assured government procurement at remunerative prices along with easy access to markets make non-basmati rice an attractive option for farmers, Gupta pointed out.
    The Centre has announced a minimum support price of 1,750 rupees per 100 kg for common grade paddy for 2018-19 (Oct-Sep) marketing season, higher than 1,550 rupees set last year.
    The minimum support price for A Grade paddy has been fixed at 1,770 rupees, higher than 1,590 rupees a year ago. 
    Easy availability of high-yielding varieties of non-basmati paddy ensures better yields and higher returns, Gupta said.
    “I think farmers make only marginally higher money in basmati because productivity is less, price is high for crop care etc,” he said.
    There are also issues related to controlled usage of pesticides in basmati crop to comply with norms on residual limits. “For farmers, it is easy to grow non-basmati and marketing is easy,” Gupta said.
    Moreover, basmati acreage may have taken a further hit because of late rains in September that led to crop loss in some areas of north India and a resultant switch to crops like cotton, coarse cereals, sugarcane mainly in Haryana, Punjab and western parts of Uttar Pradesh, he said.
    In Uttar Pradesh, in districts like Muzaffarnagar, Bagpat, Meerut, many basmati growers shifted to sugarcane on hope of higher state-advised price for cane, he said.
    Basmati is sown during Jun-Jul and harvested in Oct-Nov.
    There are seven identified regions in the country where basmati is grown – Punjab, Haryana, Himachal Pradesh, Jammu and Kashmir, Delhi, western Uttar Pradesh, and Uttarakhand. Basmati rice grown in these regions has a geographical indication tag.
    Area under the notified varieties of basmati rice has declined around 2.48% on year to 1.52 mln ha this year (Jul-Jun), Gupta said citing a report by the Agricultural Products Export Development Authority.
    Among basmati varieties, Pusa 1509 is gradually becoming a preferred variety as it is a short duration crop and gives better yield, he said.
    In Uttar Pradesh, farmers have been shifting away from the traditional 1121 basmati paddy variety as it is prone to pest attack, against which they had to use pesticide. High usage of chemicals and pesticides reduces chances of making it to the export market, Gupta said.


US$1 = 70.84 rupees
IST, or Indian Standard Time, is five-and-a-half hours ahead of GMT

Edited by Rashmi Sanyal

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This copy was first published on the Cogencis WorkStation

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