Monsoon Boosts Expectation of Bumper Basmati Rice Crop in 2020-21 Season

India’s basmati production is likely to increase by 7%. Monsoon boosts expectations of Bumper basmati rice crop in the 2020-21 season. 

Strong Prospects for Exports

According to All India Rice Exporters Association demand for Indian basmati rice is high from Middle Eastern countries, including Iraq and Saudi Arabia. Besides, East European countries are keen to buy the Indian aromatic variety. Vinod Kaul, Executive Director of AIREA, said that despite the pandemic, the sowing of Kharif crop was completed with local and migrant labourers who returned after restrictions eased. However, India has stopped shipments to Iran due to payment issues.

Bumper Basmati Production Expected in India Owing to Favorable Monsoon
Bumper Basmati Production Expected in India Owing to Favorable Monsoon

Punjab Expecting Bumper Crop

The area under Basmati this year is 4% more than the previous year’s coverage and the highest in five years in Punjab. However, the state is still short of meeting the target of covering 7 LH hectares under Basmati. Farmers prefer growing paddy than Basmati as Basmati is a non-MSP crop. The fluctuation in prices encourages farmers to grow paddy. The state has registered 6,50,150 hectares under Basmati till now.

Prices to Fall Further

A report by CRISIL Ratings said that paddy prices are likely to fall 17% in the current fiscal from an average Rs 36 per kg. Good monsoon and stable demand will lead the rice industry to a good year. Also, several basmati companies are in for a 100-150 bps margin boost owing to low prices of paddy. Despite the pandemic, several countries, including the UK and the USA, have been importing basmati from India.

Export Worries Due to Iran

Though trade continues with other countries, uncertainty looms overpayment due to exporters from Iran. The Central Bank of Iran has slowed down the allocation of currency to Iran traders against which they were importing from Iran. It bought 1.3 million tonnes the previous year, ordering over 30% of India’s rice. The country is likely to register a 20% lower volume basmati trade with Iran. Also, tea exports will come to a halt in case the payment issues remain unresolved. 

In all, the Indian rice industry is optimistic about rice trade this year due to high demand and excellent production.  

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