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Record basmati exports from India as Ramadan and pandemic surges demand

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CHANDIGARH: Basmati rice export from India is set to repeat record shipments in FY 20 as exporters cater to spike in global demand for the food grain owing to Covid-19 pandemic and the festival of Ramadan.

Gross exports from the largest rice exporting country is expected to amount to 4.4 million tonnes in FY 20, at par with FY 19, even as consignments were stranded at ports and foreign destination since last week of March due to the nationwide lockdown to combat Covid-19.

“Basmati exports have surged to most traditional overseas markets in the last quarter as consumers have gone for additional stocks due to Covid-19. The rise in demand from Middle East is also buttressed by higher buying for Ramadan,” Vinod Kaul, executive director, All India Rice Exporters Association, said. Kaul said gross exports from India are expected at 4.4 million in 2019-20 ,even though exports had almost come to a standstill in the last week of March. He said the country had its highest volumes of 4.4 million tonnes of basmati 2018-19.

This year shipments have grown by 20-30 percent to key buyers like Saudi Arabia and Iraq. “The additional buying due to Ramadan has also boosted exports in the last quarter,” he said.

But Indian exporters are not entirely amused by the late revival in basmati trade that was dampened earlier in 2019 by rise in hostilities in US-Iran relations. Global shipments of the commodity from India were down by 10 per cent in April-October. The trade had shown an uptick after November as shipments increased to Saudi Arabia, Iran, Jordan, Kuwait and the United States.

Shipments worth Rs 7000-9000 crore are struck at ports in India or export destination as the global supply chain is severely affected in the pandemic hit global market.

“Rice exporters have incurred substantial interest overheads as shipments are delayed due to lockdown. An exporter pays interest of 13-14 per cent on 70-80 per cent of the value of consignments to banks,” said Arvinder Pal Singh, president, Punjab Rice Millers Association. The exporters have sought waiver on interest payments for two months to compensate the loss in margins, he said.

Presently the consignments are struck at ports as sample testing and documentation are affected as courier services are not operational,” Ashok Sehthi, a Punjab-based basmati exporter, said.

Exporters are also worried of rise in paddy prices due to swell in domestic as well as global demand. “The increase in export from India has fueled paddy prices that were highly competitive this year compared to Pakistan. But the prices increased by 6-8 per cent after lockdown and now exporters who have advanced bookings in hand will have to bear substantial squeeze in margins,” said Sanajy Gupta, director, Bharat Cereals.

Exporters rue a sharp increase of up to 30% in freight rates of shipping containers in the past few weeks that has added to cost of logistics. The rise in freights to the US and Europe are most affected.


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