Basmati output to rise slightly, price may drop 30%

Production of basmati this year is likely to be around four million
tonne, marginally higher than that of last year, but its price is
expected to drop by up to 40 per cent in the next three months, a
leading basmati exporter said.

"The production will be higher by 0.5 to one million tonne but the price
will drop sharply by about 30-40 per cent in the next three months
period both in domestic and export price," Kohinoor Foods Ltd Joint
Managing Director Gurnam Arora told PTI here.

He said the major factor that would trigger a decline in basmati price
is about 50 per cent higher production of 'Pusa 1121' variety of basmati
last year and lowering of support price.

There is a 50 per cent increase in the basmati rice area in Punjab and
Haryana. The area has been increased from eight lakh hectare last year
to 15 lakh hectare this year in these two states, he said.

"The price of basmati rice, which usually hovers around $1,200-1,300 a
tonne, went up by almost 69 per cent to $ 2,200 a tonne 2008-09 due to
heavy demand from Iran for 'parboiled 1121' variety," Arora said.

He expects that the export price would remain around $1,200 a tonne this
year.

Gurnam said basmati export may rise by about 30 per cent this fiscal to
about 2.2 million tonnes up from 1.8 mt in 2008-09, as Iran is expected
to import a larger quantity of the commodity after a controversy on
quality was resolved.

He said the governments of both the countries had clarified that '1121'
variety basmati rice do not contain any harmful metals and chemicals.

Iran imported about eight lakh tonnes of basmati last year and this year
it could import close to one million tonnes, he added.

Owing to projected drop in prices, companies are realigning their
strategies toward domestic market. Kohinoor Foods itself had introduced
two new varieties of basmati rice in the domestic market and foraying
into ready-to-eat segment.