India 2011-12 Basmati Rice Exports May Hit Record

India 2011-12 Basmati Rice Exports May Hit Record

India’s exports of premier, aromatic basmati rice are likely to reach a record 2.5 million metric tons in the fiscal year ending March 31, 2012, despite payment problems snagging shipments to Iran, the largest market, a government official and an industry executive said.

“Demand has been good from Dubai, Saudi Arabia and Europe,” A.K. Gupta, advisor to the state-backed Agricultural and Processed Food Products Export Development Authority, told Dow Jones Newswires.

All basmati rice export contracts from India need to be registered with Apeda.

India exported 2.2 million tons of basmati rice last fiscal year.

Exports in the first 10 months of this year rose 10% to around 2 million tons, another government official, who didn’t wish to be named, said.

Doubts over export growth surfaced after Iranian buyers started withholding payments due to a sharp slide in the value of the Iranian currency after US sanctions made India’s rice far more expensive for them.

The payment system with Iran also became more complicated, virtually depriving Indian shippers of a market that traditionally accounts for more than half of basmati exports.

However, a decision by an Indian ministerial panel last week to lower the minimum export price by $200/ton to $700/ton has opened the gateway for exports to other countries, who have negotiated deals in the $700-$800/ton range.

“We expect basmati exports to gain momentum the moment a formal order is issued on the [lower] minimum export price,” Vijay Setia, president of the All India Rice Exporters Association, said.

India is expected to ship out 600,000-700,000 tons under new deals as soon as the order is issued.

Basmati supply is abundant in the country this year after a bumper crop, estimated between 3.8 million tons and 4.0 million tons.