Basmati rice costs to rise as a result of reduced production

15 February 2013
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15 February 2013 | Andy Allen

The price of basmati rice is set to rise by almost 80 per cent because of reduced production in India and Pakistan.

According to the Rice Association, the 2012 Indian harvest was as much as 40 per cent smaller than in 2011.

This is largely because the Indian government has introduced a minimum support price for ordinary long-grain rice to encourage farmers to farm other varieties.

In Pakistan, the harvest was also smaller due to farmers preferring higher-yield hybrid varieties of long grain rice at the expense of basmati rice, said Rice Association director Alex Waugh.

Basmati rice accounts for around a third of the £300 million UK rice market by value.

However Waugh explained that in India and Pakistan – the only countries where it is produced – basmati is regarded as a low-yield and high-value export crop.

“India produces about 90 million tonnes of rice a year, of which about three million tonnes are basmati. Now that there are alternative varieties, farmers have weighed up the pros and cons and decided to go with higher yield varieties,” said Waugh.

At the same time, demand has been increasing in the Middle East, particularly in Iran.

The Rice Association has warned that European millers are anticipating a repeat of the situation experienced in 2008, where suppliers of basmati defaulted on lower priced contracts and sought new contracts at higher prices.

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