Basmati rice industry likely to rebound in H2 FY17, FY18: ICRA

Source: The Hitavada      Date: 31 Dec 2016 09:30:13


Dec 30,


LOWER production volume and stable global demand is expected to push up realisations of basmati rice in FY2017 and FY2018, despite short-term impact of demonetisation, a report said.

Basmati rice industry is expecting a rebound in H2 FY2017 and FY2018 with demand driven improvement in realisation and low inventory prices, ICRA said in its report here.

“Basmati rice has witnessed growing demand in domestic market for last few years. The export demand, which has remained subdued for last two years, is expected to witness a pickup in the coming months when a majority of export orders are received. This is expected to push up the realisations in H2 FY2017 and FY2018,” ICRA Assistant Vice-President, Deepak Jotwani said.

Most of the large exporters, who were holding relatively lower priced inventory, were expected to benefit from this. While paddy prices had inched up in the current procurement season, this would be comfortably covered by growth in realisations, Jotwani said. In the past two years, the basmati rice industry has been under financial stress on account of excess paddy supply and weak international demand, leading to a sharp decline in realisations. The average export realisations declined from Rs 77,988/MT in FY2014 to Rs 56,149/MT in FY2016.

However, there has been some improvement in demand in Q1 FY2017 also reflected by the increase in export realisations to Rs 59,247/MT. For the remaining period, the export demand is expected to improve further, with Iran also expected to join the order booking.