The new season for basmati rice in India has opened with a surge in prices, propelled by vigorous demand from key buyers in the Middle East and Europe. This heightened demand has led wholesale grain markets to witness a price surge of 10% to 15% compared to the previous year.
The recent decision to reduce the floor price for basmati rice exports from $1,200 to $950 per ton has triggered a flurry of export contracts. This move has notably fueled demand, consequently driving up prices across major wholesale markets in the country's top grain-growing regions, according to farmers.
India has swiftly engaged in contracts for exporting approximately 500,000 metric tons of new season basmati rice, signaling a robust international demand for this premium aromatic variety.
The wholesale prices of prime basmati rice variants have seen a significant uptick, now standing at around 50,000 rupees ($599.93) per ton—a notable climb from last year's 45,000 rupees per ton. Similarly, prices for some other basmati rice varieties have surged to 46,000 rupees per ton, compared to last year's 40,000 rupees.
"Rice millers and exporters are actively procuring basmati from us to fulfill their export commitments, and it appears that demand will remain strong," mentioned a farmer familiar with the market dynamics.
In urban areas, households are reportedly spending between 20% to 40% more on their consumption of basmati rice, as per the latest survey conducted by Local Circles, a consultancy based in New Delhi.
Annually, India exports over 4 million tons of basmati rice—a sought-after long-grain variety revered for its aromatic essence—to countries including Iran, Iraq, Yemen, Saudi Arabia, the United Arab Emirates, and the United States. Additionally, Europe stands as a significant market for Indian basmati rice.
In a move to stabilize domestic prices, India implemented a ban on non-basmati white rice exports in July, later establishing the floor price for basmati rice exports.
The current surge in demand and subsequent rise in prices reflect the resilience of India's basmati rice in the global market and its pivotal role in meeting the preferences of discerning consumers worldwide.