Basmati rice exports to grow strong in FY2018 : ICRA.

KOLKATA: Indian basmati rice exports are expected to post strong growth in FY2018 and FY2019 on the back of improved demand in the international market, especially from Iran and and transference of higher paddy prices over the last two procurement seasons, said ICRA on Tuesday. According to an ICRA note, Indian basmati rice exports have witnessed strong revival in the current fiscal with 22% growth in value in first nine months of FY2018 over the previous fiscal, after having been on the downward trajectory over FY2015 to FY2017. This buoyant exports growth has been fuelled by 23% surge in average realisations (Rs 64,594/MT in 9M FY2018 as against Rs. 53,985/MT in FY2017) and it is estimated that basmati rice exports may cross Rs. 26,000 crore for FY2018 (growth of 20% over last fiscal) and Rs. 28,000 crore for FY2019. The concern however is that the export volumes have largely remained stagnant, in line with last few years. Says Mr. Deepak Jotwani, Assistant Vice President, ICRA , “Historically Saudi Arabia and Iran have remained the largest importers of Basmati rice from India, accounting for 40-45% share. However, after having remained consistent for many years, Saudi Arabia’s share of Basmati rice imports from India has declined in recent years – it stood at ~14% in 7M FY2018. This has been largely absorbed by Iran, whose share has surged to 28% in 7M FY2018 (as against 18% in FY2017), fuelling the industry growth in the current fiscal. Iran had imposed a temporary ban on imports around August 2017 which has been removed in January 2018. While this development is likely to support the industry growth in the last quarter of the current fiscal, greater dependence on Iran as a major export destination could spell volatility for the industry.” For second year in a row, paddy prices have firmed up by 20-25% in the procurement season of 2017. This price rice is largely attributable to lower (by 10-15%) paddy sowing on the back of a moderate monsoon; and improved demand for Basmati rice in the international market. This increase in paddy price is likely to provide a fillip to Basmati rice prices in FY2019. However, sustained uptick in paddy prices over the past two procurement seasons could adversely impact the profitability of industry players in FY2019, especially in case of volatility in international demand. Mr. Deepak Jotwani concludes: “In the current fiscal, average export realisations have firmed up considerably in 9M FY2018 over FY2017. Improvement in demand on the back of recent resumption of imports by Iran, along with the higher paddy prices in the recently concluded procurement season, is likely to sustain the average realisations in Q4 FY2018 as well. As a result, the export value is estimated to grow to around Rs. 26,000 crore in FY2018, a growth of 20% over FY2017. The momentum percolating to the next fiscal is likely to fuel the industry growth in FY2019 as well, wherein ICRA estimates the export value to stand at Rs. 28,000 crore.” 

Source: economictimes.indiatimes.com