PUNE: Indian Basmati rice exports have witnessed a rebound in the current fiscal with Q1FY 2018 registering a 32% growth in exports contributed by 25% increase in realisations and 7% increase in volumes.
This comes after a three-year consecutive decline in basmati exports till FY2017 (Rs. 21,605 crores). In the past, despite the volumes holding firm, the exports have been adversely impacted by pressure on realisations (from a peak of Rs. 77,988/MT in FY2014 to Rs. 54,011/MT in FY2017), driven by lower demand in the global market as well as lower paddy prices over the procurement seasons of FY2015 and FY2016.
Commenting on the trend, Deepak Jotwani, Assistant Vice President, ICRA said: “Basmati rice exports in the current fiscal have been encouraging, especially driven by demand from Iran. The Middle Eastern countries are the biggest importers; and also a source of volatility in demand. Demand from Iran, the second largest importer has been fairly volatile, primarily on account of import bans imposed from time to time. In Q1FY2018, Iran has been the primary contributor to growth in industry exports – contributing around 40% to the total. However, from August 2017, Iran has again discontinued importing Basmati rice from India. Resumption of imports by Iran, which is anticipated around the procurement season, would be critical for the overall demand for Basmati rice. Any delays in the same could dampen the paddy procurement in the upcoming season as well as subdue the exports outlook for H2FY2018 and FY2019. This is especially material in the light of a decline in volume sales from other key market - Saudi Arabia (13% of total exports in Q1FY2018 as against 20% in FY2017).”
“ICRA expects that the demand concerns in the form of Iran import ban and sluggishness from other key geographies would be overcome and export volumes in FY2018 to be around 4.1 million MT (4% higher than FY2017). In addition, higher paddy prices in the last procurement season and likelihood of firm prices in the upcoming procurement season are expected to push up the average realisations in FY2018. As a result, export value is expected to grow to around Rs. 26,000 crores in FY2018, a growth of 21% over FY2017," said Jotwani.