Saturday 27 October 2018

Basmati paddy price surges 25% on expectation of output decline

Rising demand also behind rise in price KOLKATA, OCTOBER 25
Basmati paddy prices have firmed up by 25-30 per cent on the back of speculation of a drop in production and firm demand both in domestic and export markets. The price of the premium Pusa 1121 variety of basmati paddy is presently ruling at around Rs. 3,700 a quintal, as against Rs. 2,800 a quintal during the same period last year, recording a rise of nearly 32 percent. The price of Pusa 1509 is also up by 29 per cent at Rs. 3,100 a quintal. Harvesting of basmati paddy, primarily cultivated in Punjab and Haryana, starts in October and continues till December.

"As per satellite data the area under basmati paddy cultivation is down by 2-3 per cent this year and the carry-forward stock from last year is also low. This, coupled with a firm demand for exports, has helped push up prices," Vijay Sethia, President, All India Rice Exporters’ Association (AIREA), told BusinessLine. While the area under paddy cultivation is slightly lower this year, the yield is better because there has been a shift to Pusa 1509, a high-yielding variety that produces close to 24-28 quintal an acre, as compared to Pusa 1121, which yields 18-22 quintal an acre. The country produces close to 9 lakh tonnes of basmati paddy each year, from which nearly six lakh tonnes of rice is produced. According to Suraj Agarwal, CEO, Tirupati Agri Trade, unseasonal and heavy rains in the months of August and September have affected the standing crop marginally, which may have an impact on production.

However, the rise in prices is more on account of a strong demand from overseas markets. Typically there is a dip in price when the new crop begins to arrive in2 the market; however, prices have increased in the last 15-20 days, sources said. Pusa 1509 has moved up by nearly 19 per cent from Rs. 2,600 a quintal and Pusa 1121 by close to 9 per cent from Rs. 3,400 a quintal just about 20 days ago. “Production is almost similar to last year; the price rise is more due to speculation of a possible dip in production,” said Gurnam Arora, Joint Managing Director, Kohinoor Foods. Rice prices firm up Firming up of paddy prices over the last two procurement seasons coupled with a strong demand from overseas markets, particularly Iran, has helped boost average realisation of basmati rice. The price of basmati rice has increased by nearly 12 per cent to Rs. 73,000 a tonne this year, as compared to Rs. 65,000 a tonne last year. In the period from April to August of the current fiscal, India exported close to 1.85 million tonnes of basmati rice valued at Rs. 13,629 crore. The country exported over four million tonnes of basmati rice valued at around Rs. 26,870 crore in FY’18. Iran and Saudi Arabia together account for nearly 50 per cent of imports.

“In the first four months of the current fiscal year, Iran has already imported close to 70 per cent of its previous fiscal’s total basmati rice imports from India,” said Deepak Jotwani, assistant Vice-President, ICRA. AIREA along with APEDA and the Punjab government, has also been taking several initiatives to boost exports to the US and Europe by educating farmers against pesticide use. It is to be noted that several export consignments of basmati were rejected by the US and the EU because of high pesticide residue last year. Saudi Arabia has also been following the European Union by tightening pesticide residue parameters.