Double whammy for basmati growers, exporters

CHANDIGARH:It’s a double whammy for basmati growers across the country. On the one hand, there is over 30% increase in area under cultivation, resulting in problem of plenty, on the other hand, blockage of consignments to Iran, a major importer of Indian basmati, has resulted in sharp decline in its prices.

ILLUSTRATION: SANDEEP JOSHI

Vijay C Roy
Tribune News Service
Chandigarh, October 1

It’s a double whammy for basmati growers across the country. On the one hand, there is over 30% increase in area under cultivation, resulting in problem of plenty, on the other hand, blockage of consignments to Iran, a major importer of Indian basmati, has resulted in sharp decline in its prices. The prices have come down by Rs 200-Rs 600 per quintal as compared to last year.

Haryana and Punjab account for more than 75-80% of basmati exports.

Driven by higher remuneration and bumper exports last year, the area under basmati has gone up by 31% in the current season, according to All India Rice Exporters Association (AIREA). In the current year (2019-20), the total area touched 19.39 lakh hectares compared to 14.80 lakh hectares last year.

“Initial survey indicates that there has been 31% increase in the area under cultivation. However, the exact data would be ascertained after few more reports come in,” said Vinod Kumar Kaul, executive director, All India Rice Exporters Association. However, the increase in the area was marred by less demand from Iran. In 2018-19, Iran accounted for 34% of India’s basmati exports.

“This year, basmati exporters to Iran are at the receiving end as their huge money is blocked in Iran, rendering them liable to heavy interest burden and stoppage of further shipments due to the uncertainty,” said Kaul.

He said, “During the first four months of the current year, the exports to Iran were 4,96,908 MT, but in August the exports dropped drastically to 13,034 tonnes. The major cause for the fall in exports is not releasing of currency allocation to Iranian rice importers by the Central Bank of Iran since June 5, 2019. This has led to a large number of consignments exceeding 1,25,000 tonnes getting stuck at Iranian ports since early June this year.”

The root cause of the problem is the US sanctions on imports of oil from Iran, which came to a halt from May 2 this year.

“The exporters have to really work hard as the exports are already on the declining trend and their payments are stuck,” said Vijay Setia, president, All India Rice Exporters Association. During April-July, exports to different countries were down by 9% i.e. by 1.42 lakh tonnes.