India's basmati rice industry is in jeopardy due to the ongoing conflict between Iran and Israel. India is the world's largest basmati rice exporter, with Punjab accounting for 40% of total exports.

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India’s Basmati Rice Exports to Iran

Approximately 25% of India’s exported basmati rice is sent to Iran. In order to support its domestic crop, Iran has prohibited imports for two months, from October 21 to December 21, which has had an impact on exports.

Insurance providers no longer offer coverage for exports to Iran. Thus, basmati prices have fallen by Rs 800 per quintal because exporters and millers are no longer purchasing the same quantity as they were previously, leaving farmers concerned.

This year, a 15% surplus crop is anticipated, which has made the situation even worse. As a result, Punjabi farmers and exporters of basmati rice are hit twice.

During 2023-24, India was the world's largest exporter of basmati rice, exporting 5,242,048.39 metric tonnes worth Rs. 48,389.18 crore (USD 5,837.12 million), with Punjab accounting for 40% of the total.

However, the cost of basmati has decreased this year in comparison to last. At a loss of Rs 800, 1509 varieties of Basmati are currently being sold for Rs 2,700 per quintal, down from Rs 3500 per quintal last year. 

Farmers are consequently suffering significant losses, and exporters of basmati rice are clearly concerned.

The ability to export to Iran has been stopped because insurance companies have stopped providing insurance on exports to Iran, Punjab Rice Millers and Exporters Association Vice President Ranjit Singh Jossan told this newspaper.

He stated that, “The ongoing conflict between Iran and Israel has created major concerns for basmati rice exporters and farmers. In response to the demands of basmati stakeholders, the union government last month provided significant relief by completely abolishing the MEP (Minimum Export Price) on basmati.”

He said that there have been numerous problems with exports as a result of the ongoing conflict between Russia and Ukraine.

"Saudi Arabia, a major importer of Basmati rice, imports 1 million tons from India and has a significant seaport in Jeddah, close to Yemen. Ships travelling this route face threats from Houthi rebels in Yemen, which previously created difficulties in the Red Sea. Additionally, the current tensions involving Israel and Iran may lead to higher sea freight costs, potentially impacting basmati rice exports,’’ said Jossan.

Rise In Basmati Rice production

According to Jossan, 15% more basmati crop is anticipated this year, which could present significant difficulties for India's basmati exporters.

Uttar Pradesh, Rajasthan, and Madhya Pradesh have seen a rise in basmati cultivation in recent years, in addition to Punjab and Haryana. "As per a survey conducted by the Basmati Rice Exporters Association of India last month, the basmati crop in the country is expected to be 14 to 15% higher this year. Last year, due to high sea freight costs, MEP, and other issues, one million metric tons of basmati rice remained unsold till October 1. This year, a 15% surplus crop has created an atmosphere of uncertainty among basmati exporters,’’ he says.

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REFERENCE- newindianexpress.com