Lower demand from importing countries to pressure Indian basmati

Availability of excess supplies in destination markets is going to keep the pressure on basmati rice exports from India at least in the first half of the current financial year, ratings agency ICRA said in a recent report.

It said importing countries led by Saudi Arabia, Iran and the UAE, which make up for nearly half of India’s exports, had stepped up inventory building on a sharp fall in basmati prices.

Exports rose 20 per cent to 3.07 million tonnes in April–December 2015, from 2.57 million tonnes in the corresponding period of 2014. The coming months would see a slowing.

Falling prices have meant that per-unit realisation declining to $885 a tonne in April–December, from $1,312 a tonne in the comparable period of 2014.

Weak sales growth and a decline in profitability, along with inventory losses, are expected to be key trends in the financials (to be reported) of basmati rice entities, it said. Any improvement is likely only from the next paddy harvest season in the second half of 2016-17.

“Supply of basmati paddy is expected to witness some moderation, as farmers are likely to shift away, given the non-remunerative prices in the past two crop cycles. More, since Iran has removed the ban on import, demand is also expected to witness some improvement,” said the report.

 

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