It’s all bright on the export front

Vijay C Roy in Chandigarh

FOR the second year in a row, basmati is going to occupy the top slot in the export of agri and processed food in 2018-19. Considering the estimates, the exports are projected to hit a record level of Rs 30,000 crore, mainly because of higher realisation. The previous high was Rs 29,300 crore in 2013-14.

From April 2018 to February 2019, basmati contributed 25.24 per cent to the country’s agricultural and processed food products’ exports (value-wise), followed by buffalo meat (20.13 per cent).

Buffalo meat has been the highest agri-related export item from India for three consecutive years — 2014-15, 2015-16 and 2016-17. In 2013-14, basmati was the top agri export item from India.

According to provisional data of the Agricultural and Processed Food Exports Development Authority (APEDA), basmati exports (April 2018-February 2019) were 38.55 lakh tonnes, compared to 36.28 lakh tonnes during the corresponding period of the previous fiscal.

The exports witnessed growth volume- wise despite challenges such as the pesticide residue issue leading to a fall in shipments to the European Union (EU); Saudi Arabia mulling adoption of stringent pesticide rules; and initial uncertainty due to the imposition of trade sanctions on Iran by the US Government.

As per exporters, a record shipment to Iran in January and February boosted basmati exports from the country. 

During this period, exports grew by 20.20 per cent in rupee terms to Rs 28,599 crore as against Rs 23,793 crore in the same period the previous year. In dollar terms, the growth was to the tune of 11.12 per cent. The growth in rupee terms was higher than in dollar terms mainly because of a weaker rupee. The average realisation has been about 4.5 per cent higher at $1,065 per tonne during the period as against $1,019 per tonne in the previous year.

Exporters say that despite a significant increase in exports because of Iran opening imports from India, the volume will be almost the same as compared to the last fiscal. According to the exporters, Iran’s annual basmati import market is pegged at around 1 million metric tonnes.

“If we consider last five years’ average, we perceive that the export volume will be around 40 lakh tonnes, which will be more or less the same compared to the last fiscal,” says All India Rice Exporters’ Association president Vijay Setia.

Basmati exports for FY 2017-18 were 40.5 lakh tonnes as compared to 39.85 lakh tonnes during the previous year. According to credit rating agency ICRA, over the next few quarters, the export market demand would remain steady, supported by resumption of import in the key market of Iran.

Basmati is one of the major cash crops of Punjab and Haryana, which account for more than 70-75 per cent of the exports from the country. Other major basmati-growing states are Uttar Pradesh (western), Uttarakhand, J&K, Himachal Pradesh and Delhi, which contribute 25-30 per cent.

Setia says that higher realisation for farmers could translate into more area under basmati in the 2019-20 season. “We believe that there will be an increase in area to the tune of 10-20 per cent in the basmati belts of Punjab, Haryana and Uttar Pradesh,” says Setia.

In the last fiscal, basmati production dropped by around 5 per cent as farmers shifted to non-basmati due to a considerable increase in its minimum support price, and loss of the standing crop due to untimely rain in some of the key basmati-growing states.