Outlook of Basmati Rice in the near future

Basmati rice has long been a crucial ingredient in various recipes savoured by people all around the world. Its popularity comes from its distinctive features having long grains, aromatic fragrance & texture appeal. It is primarily grown and imported from India and Pakistan, the former being the bigger partner and major exporter in the world. While rising inflation and shortages of various food products from different parts of the world are staring at us, Basmati seems to be no exception. The reports coming in from both the origin countries suggest major shortages and rising costs are just writing on the wall.

The main reasons behind these undesirable likely outcomes are:

• Due to IMF conditions imposed on her, Pakistan Government had to increase the petroleum products prices steeply thereby fueling very high inflation. The cost of production has gone significantly. As a result, now the Basmati price from Pakistan is being quoted higher than that from India.

• Monsoon (rainy season) in India has ditched the main rice-growing areas of the country this year and hence the area under paddy (Rice crop) has shrunk by at least 25%. Even the areas under sowing are also likely to have lesser yield due to delayed rains.

• Lower production of the wheat crop this year in India and practically no exports of the same from Russia and Ukraine have caused a major shortfall and increase in prices of this crop in the market. Rice has replaced wheat as the second choice of natural staple food.

• Due to the Russia Ukraine conflict, there is a sharp increase in crude prices. The forex reserves of India are depleting fast. To tame the problem, the trade between India and the Middle East is being done in the local currency. The Middle East in anticipation of a shortage in Basmati in the coming year is placing advance orders of Basmati in exchange for crude.

• For the first time, China has started importing Basmati from India. Apart from China, Bangladesh has increased its demand as well mainly because of damaging floods which have affected their production capacity.

  
  

All the above factors are likely to add to the woes of importers of Basmati. We can expect a steep price rise and shortages.

What you should do?

You should be taking the following steps to avoid shortages:

• The most important thing to do is to forecast your demand as best as possible and convey it to your suppliers. New supply contracts shall be put in place in September. The timely action in form of advance POs shall be good on your part.

• Work with your suppliers, and make payments in a timely manner so that no one is stuck during the import process.

• Rice gets infested in summers. Therefore keep your warehouses nice, tidy and airy so that whatever stock you carry should remain free of infestation. Don't overstock.