India commands a mammoth 40% share in the global rice trade and the Asian nation exported 21.23 Million Tonnes(MT) of rice in the 2021-22 fiscal year as against 17.78MT in the year before(2020-21). India’s basmati rice is one of the highly demanded varieties of rice in the global market and the country faces competition in this regard from its neighbor Pakistan.
Rise In India’s Basmati Rice Shipments
As per data from the Agricultural and Processed Food Products Export Development Authority (APEDA), India’s shipments of basmati rice from April-November of the current fiscal (2022-23) have increased by 13% to 2.73 million metric tonnes (MMT) from 2.4MMT in 2021-22 period.
The rise in the market value of basmati rice and its exports from India are due to short supplies from Pakistan, the country’s only other competitor in the global market for long-grained rice. The value of India’s basmati rice exports has increased from $ 2.06 billion to $2.87 billion as the unit value of the commodity has increased by 39%, from $860 in 2021-22 to $1,051 during April-November of the current fiscal.
Iran purchased 6.28 lakh tonnes of basmati rice during the first half of the current fiscal with Saudi Arabia (4.45 lakh tonnes) and the United Arab Emirates (1.8 lakh tonnes) following the trail.
Possibilities Of A Further Hike
In terms of rupees, the rise in the value of basmati rice is 48.6%. Even though data is only available until November’22, the situation has drastically deteriorated since then, with a 44% decline in Pakistan’s basmati exports in the July-December period.
Prices for basmati rice have risen more since then. Currently, Pakistan’s basmati rice is selling at $1,350 per tonne, whereas Indian fragrant rice is at $1,450 per tonne in the global markets. Farmers of basmati rice have received a 60% increase in price this fiscal year as a result of brisk exports.
Data from Agmarket, a division of the Agriculture Ministry, show that the weighted average price of basmati paddy has increased from $2,688 per quintal to $4,326 per quintal. According to S Chandrasekaran, a trade analyst and author of the book "Basmati Rice: The Natural History and Geographical Indication," India has room to raise basmati prices further in light of the shortfall in Pakistan.
Fall in Pakistan’s Basmati Rice Exports
The wettest August Pakistan has seen in 61 years has had a significant negative impact on the country. Floods have significantly hampered neighboring country's agricultural output, particularly the production of basmati and non-basmati paddy.
The US Department of Agriculture (USDA) has not predicted any significant declines in agricultural production, despite the devastation. However, according to the Pakistani Rice Exporters Association, basmati production in the province of Sindh has decreased by 40% as a result of flooding.
India, on the other hand, is anticipated to produce more basmati, but specifics are not yet available. According to trade sources, Pakistan is experiencing turmoil as a result of a lack of US currency that prevents it from buying goods. Islamabad's balance of payments issue would worsen as a result of the decline in Basmati Rice Exports.
Situation In Pakistan
Skirmishes over food are currently taking place in Pakistan, and social media is full with reports of these events. Due to a heatwave that damaged its wheat crop the previous year, it is currently looking to import to make up for the lack of the domestic market.
According to Chandrasekaran, there would have been a monthly shortage of at least 50,000 tonnes of Pakistani basmati on the international market between August and December. "The Karachi-Lahore rail route has been
harmed by the devastating floods. Another factor contributing to Pakistan's basmati export problems, he noted. The work to reconnect the link has been delayed due to disagreements between China and Pakistan over the Main Line railway project under the China-Pakistan Economic Corridor.
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