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Basmati rice exports grow 32% in Q1

COIMBATORE: Basmati rice exports from India witnessed a rebound in the current fiscal registering 32% growth in the first quarter (Q1FY2018) of the current fiscal on the back of a 25% increase in realisations and a 7% improvement in volumes.
This comes after three consecutive years of decline in basmati exports till 2016-17.
In the past, despite the volumes holding firm, exports have been adversely impacted by pressure on realisations (from peak of Rs 77,988 per tonne in FY2014 to Rs 54,011 per tonne in FY2017), driven by lower demand in the global market as well as lower paddy prices during the procurement seasons of FY2015 and FY2016.
"Basmati rice exports in the current fiscal have been encouraging, especially driven by demand from Iran," said Deepak Jotwani, assistant vice-president at rating agency ICRA.
"Middle Eastern countries are the biggest importers and also a source of volatility in demand," he said.
"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 was the primary contributor to growth in industry exports - contributing around 40% to the total," Jotwani said.
However, from August this year, 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," ICRA stated.
"Any delays in the same could dampen the paddy procurement in the upcoming season as well as subdue the exports outlook for H2FY2018 (second half of 2017-18) and FY2019. This is especially material in the light of a decline in volume sales from other key markets - Saudi Arabia," the agency said.
During the last procurement season of October - December 2016, basmati paddy prices firmed up by 20%-25% across varieties, on the back of relatively lower production. During the current season, there has been rainfall deficit in the key basmati rice-producing states of Uttar Pradesh and Haryana till mid-September 2017.
Water reservoir levels are also lower in Uttar Pradesh compared to last year. "These factors can translate into lower paddy production in the current crop season, and thus the paddy prices are likely to open firm in the oncoming procurement season," ICRA said.

The agency 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 tonnes, a 4% increase over the previous year.