Since May, Basmati Rice Export realization has been taking an upward leap, this year.

However, exporters are apprehensive about possible gains after a steep increase in shipping costs, despite the government’s assistance.

The continuous month-on-month drop in unit value realization in basmati export started from a peak of $1,107/tonne in July 2019. But the price realization in May increased to $842 from $833 in the previous month and in August it reached $889. There was an expectation in the industry that prices might go up over $1,000 level, a trade source said.

Farmers were distressed with the fall in output of Basmati Rice with the lower realization of Pusa 1,509 last year that many preferred to sell it to the government at minimum support price (MSP) instead of selling in mandis. However, the initial mandi prices of the newly harvested crop have created hope for the variety that farmers may not shun completely.

According to Agmarknet data, the average price of Pusa 1509 was Rs 2,800-3,000 per quintal this month while the total arrivals were to the tune of 2,627 tonnes during September 1-26. Last year, the prices of Pusa 1509 were Rs 1,800-2,000/quintal in September-October.

“While the demand from Saudi Arab may be flat or slightly lower, the import from Iran will depend on the geopolitical developments. As these two countries used to buy nearly half of the total basmati shipped out of the country, the government needs to use geo-economical strength with EU, UK, and other countries in West Asia,” said S Chandrasekaran, a trade policy analyst.

Since the European Union (EU) has flagged the issue of Tricyclazole, India has to sort it out, sooner the better, Chandrasekaran said. Pakistan has gradually increased its share of basmati export to the EU after the pesticide issue emerged as a major bone of contention five years back, he added. Pakistan has gained 1,87,776 tonne in the EU market, on an average of $ 170 million/year in the last six-seven years, trade sources said.

India’s basmati exports dropped 19% to $ 1.2 billion (Rs 8,975 crore) during April-July this fiscal from the year-ago period. There was a fall in basmati exports in terms of both quantity and unit value realization. On the other hand, due to increased volume (74% growth), the shipments of non-basmati rice surged 60% to $ 1.9 billion during this period.

Traders estimate the basmati rice production in the country to drop 10% to 8.08 million tonnes in 2021-22 crop year (July-June). This aromatic rice is grown in the Indo-Gangetic plains of India’s Punjab, Haryana, Jammu and Kashmir, Himachal Pradesh, Uttar Pradesh, and Uttarakhand.

Amid a surge in shipping costs, the government on September 10 extended some relief to exporters of specified farm products by reintroducing the Transport and Marketing Assistance (TMA) scheme, with wider coverage and much larger support, for one year until March 2022.

Rates of assistance have been increased by 50% for exports by sea and 100% for those by air while dairy products are also now allowed to be covered for assistance under TMA as shipping costs surged by over 300% in August from a year before.