Following a near record high last year, industry officials predict that India’s basmati rice exports would decline in 2024 because neighboring Pakistan is selling the grain at competitive pricing in tandem with a resurgence in output.
The premium long-grain rice type, known for its aroma, is mostly exported from India and Pakistan to the United States, Saudi Arabia, Yemen, Iran, Iraq, and the United Arab Emirates.
Due to decreased supplies from Pakistan and stocking attempts by importing nations, India’s basmati rice exports increased 11.5% from the previous year to 4.9 million metric tons in 2023—just short of the record high of 5 million tons reached in 2020, according to industry experts.
According to government figures, the world’s largest rice exporter made a record $5.4 billion in 2023 because to shipments of basmati rice, up roughly 21% from the year before due to higher prices.
“Buyers were scrambling to stock up last year during Pakistan’s production problems. However, because of higher output this year, Pakistan provides cheaper pricing than India, according to prominent exporter Vijay Setia of the Indian state of Haryana.
According to Chela Ram Kewlani, chairman of the Rice Exporters Association of Pakistan (REAP), Islamabad’s total rice exports could increase to 5 million tons in the 2023–24 fiscal year from 3.7 million tons the previous year. Kewlani made this announcement last month.
According to Akshay Gupta, head of bulk exports at KRBL Ltd., Pakistan’s exports are now more competitive due to the weakening of the Pakistani rupee.
According to Gupta, decreasing export demand combined with an estimated 10% increase in basmati rice production in India has begun to drive down basmati prices there.
According to data provided by India’s Ministry of Commerce and Industry, Iran, the country that purchases the most Indian basmati rice, reduced its purchases by 36% in 2023; however, the shortfall was compensated by increasing shipments to Iraq, Oman, Qatar, and Saudi Arabia.
The government’s imposition of the minimum export price (MEP) on basmati rice caused Indian exports to stall in September and October, but they swiftly picked up again, according to an exporter located in New Delhi.
Prior to reducing it to $950 in October, India levied the MEP on shipments of basmati rice in August at a rate of $1,200 per ton, which was higher than the going rates in the market.
But exports started to struggle again in January, and exporter Vijay Setia warned that they would drop even more in the near future if customers put off orders because of higher freight costs brought on by delays in shipping via the Red Sea.
“Buyers are holding ample inventory; there’s no need for them to rush,” he stated.
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