Basmati Production Increases to 13 Million Tons, Millers and Consumers Face Rising Prices
Published on: February 13, 2024.
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India’s basmati rice production has increased from 11 million tonnes (mt) in 2022-23 to 13 mt this year. However, despite the larger crop size, both millers and consumers are paying higher prices for the premium grain. This can be attributed to export demand and a growing domestic market.
Kunal Gupta, the senior manager (procurement & production) at KRBL Ltd, India’s largest basmati miller and branded rice seller, stated that the average price of paddy delivered at their plant has increased from around Rs 46 to Rs 50 per kg. Farmer realizations have also increased from Rs 41-42 to Rs 44-45.
Last year, India produced 11 mt of basmati paddy, which would have yielded about 7.25 mt of milled rice and 5.5 mt of “head” or non-broken grain. India exported 4.56 mt of basmati rice in 2022-23, with shipments during April-November 2023 increasing by 9.6% compared to the same period in the previous year.
Unlike non-basmati grain, the Indian government has not imposed any export prohibitions on basmati rice. This has allowed basmati shipments to continue with robust demand. The growing domestic market, which accounts for approximately 2.7-3 mt, is also contributing to the rise in prices. The market is expanding, particularly in non-metro cities and the South, which traditionally have not been major basmati consumers.
Ayush Gupta, KRBL’s business head, explained that the share of domestic packaged basmati rice sales in the top 10 cities has fallen from 60% to 40% between 2016-17 and 2022-23. The share has decreased even further for metros in the South, from 48% to 30%. The domestic market for basmati rice has room for further penetration, as it is relatively underdeveloped compared to other FMCG products.
The combination of a growing domestic market and exports has led to an increase in the average retail price of branded basmati rice, ranging from broken to aged whole grains. The price has risen from Rs 80 to Rs 90 per kg in the last year. Additionally, the modal price of regular non-basmati rice has also increased from Rs 35 to Rs 40, despite export restrictions, due to a smaller crop resulting from subnormal monsoon rain.
KRBL has a significant presence in the domestic basmati market, claiming a 25% share of the 3 mt market through its ‘India Gate’ and ‘Unity’ brands. The market consists of in-home and institutional consumption, with 1.8 mt consumed in households and 1.2 mt in institutions such as hotels and restaurants. KRBL’s basmati rice sales totaled 0.7 mt last year, including both head rice and broken rice.
KRBL’s rice mill in Punjab’s Sangrur district is the largest integrated rice mill in the world. It has a milling capacity of 2,500 tonnes per day and facilities to store paddy and rice. The company also has a power plant and units to process bran and produce furfural, using the byproducts of rice milling.
Overall, the increase in basmati rice production has not resulted in lower prices for millers and consumers. Export demand and a growing domestic market have driven up prices, reflecting the importance and popularity of basmati rice in India and abroad.
Source: [Indian Express](https://indianexpress.com)
