India, the world’s largest producer of aromatic basmati rice, may miss a target to boost exports 25 percent this year as a rally in domestic prices curbs demand from buyers in Europe and the Middle East, a trade group said.
Shipments of the grain, which can fetch about double the rate of traditional white rice, may total 3.5 million metric tons in the year ending March 31, less than the 4 million tons forecast in August, M.P. Jindal, president of the All India Rice Exporters’ Association, said in an interview on Jan. 28. Exports were 3.2 million tons in 2011-2012, he said.
Prices in India rallied 38 percent this year after the government raised rates for the non-basmati variety to a record, potentially hurting earnings at exporters such as KRBL Ltd. (KRB), Kohinoor Foods Ltd. (KFL) and LT Foods Ltd. (LTFO) Farmers may boost planting to benefit from the surging cost of the grain used to make dishes including biryani and pilaf, potentially doubling the harvest and increasing exports, said Vijay Setia, a former president of the association.
“Buyers are placing smaller orders because of higher prices,” Setia said in a phone interview. “I don’t see improvement in exports this quarter.”
The average price of basmati has climbed to $1,100 a ton from $800 a year earlier, said R.S. Seshadri, a director at Tilda Riceland Pvt., a New Delhi-based exporter. Benchmark 100 percent grade-B Thai rice costs $616 a ton.
Shares of Kohinoor fell 0.3 percent to 29.80 rupees, while KRBL climbed 5.4 percent to 26.60 rupees in Mumbai today.
Basmati paddy production may double next year from 5.7 million tons in 2012-2013, Setia said. Exports were 2.5 million tons in the nine months ended Dec. 31, compared with 2.2 million tons a year earlier, he said.
India controls 65 percent of the overseas basmati market, according to the state-run Agricultural and Processed Food Products Export Development Authority, while Pakistan, the only other main producer in the world, accounts for the rest.
The aromatic rice variety, specific to a geographic region, is cultivated in the states of Haryana, Uttar Pradesh and Uttarakhand in India, and in Punjab that straddles both the South Asian countries.
Saudi Arabia and Iran are two major buyers of Indian basmati. The U.S., Europe and Africa also purchase the grain.
India’s rice exports including the non-basmati variety, are set to to drop 23 percent to 8 million tons in 2012-2013 from 10.4 million tons in 2011-2012, according to the U.S. Department of Agriculture. Production may fall to 99 million tons from 104.3 million tons, according to the agency.
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