Basmati price slides, so do rice mills’ fortunes

Praful Chander Nagpal

Fazilka, May 24

The rice mill industry in Fazilka has been facing its worst-ever financial crisis as the price of the 1121 variety of basmati rice has been sliding since the past two years.

The situation has deteriorated further as the Gulf countries, which are the bulk buyers of the variety, stayed away from the Indian market.

Due to the low price, rice mill owners in Fazilka district are facing losses to the tune of about Rs 200 crore.

Official sources said that private traders, including rice mill owners, had purchased the popular 1121 variety of paddy at Rs 4,000-4,500 per quintal two years ago.

After shelling the paddy, they sold rice at the rate of about Rs 9,000 to 10,000 per quintal and earned a good profit. But after that, the price of basmati rice started crashing.

During this season, rice millers purchased paddy at rate of Rs 2,800 to 3,100 per quintal. Rice miller Avinash Kalra said that after milling the paddy, they would be able to realise the input cost only if the price climbs to Rs 5,500 to 6,000 per quintal as compared to present price of Rs 4,100 to 4,200 per quintal.

Millers had stocked the rice in large quantities hoping for an increase in price. But to the agony of the millers, the price came down further.

Sources said that private traders purchased paddy worth about Rs 900-1,000 crore during the kharif season. Keeping in view the gap in price, the millers have been facing a loss to the tune of about Rs 200 crore.

The main reason for the fall in price is that the Gulf countries, which are the bulk buyers of the produce, did not enter the market. Sources said that major player Iran imposed a 43 per cent duty on the import of the Indian aromatic variety, resulting in nil export. Secondly, the bumper crop in India has also affected the price.

There are about 29 rice mills in Fazilka and the adjoining Ladhuka areas. These mills are considered to be the only industry in the border belt.

The government has been unable to help stabilise the rice trade. The rice millers have demanded that the central government should intervene, prepare effective export policy and persuade the Gulf countries to purchase basmati rice to save them from the total ruin.