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Time of India
4 days ago
- Business
- Time of India
US tariff crisis puts Punjab basmati exporters, growers in peril
Chandigarh: The new US policy imposing a 50% import tariff on Indian basmati rice presents a challenge for both exporters and its growers in Punjab. This duty hike is set to make India's premium grain uncompetitive against rival Pakistan in a key global market, adding to the pressure on growers already affected by falling domestic prices. If basmati growers are compelled to switch to regular paddy, it could undermine the state's crop diversification efforts, which are essential to conserving groundwater resources. While the US market may be smaller in volume than West Asia, it is crucial to the profitability of premium aromatic varieties. This punitive tariff is set to directly benefit India's arch-rival, as Pakistan's lower tariff rate will likely shift a greater share of the US market to their exports, which currently account for 50% compared to India's 19%. The new tariffs come at a time when basmati prices are already in free fall. The cost of popular varieties like 1121 dropped from Rs 4,500 per quintal in 2022-23 to Rs 3,500 in 2023-24, with expectations of a further decline. Basmati exporters fear this price slump could make farmers abandon basmati in favour of regular paddy, which is protected by a minimum support price (MSP) of over Rs 2,400 per quintal. This shift could undermine the state's crop diversification efforts, which were put in place to address concerns over groundwater depletion. by Taboola by Taboola Sponsored Links Sponsored Links Promoted Links Promoted Links You May Like Undo Sanampreet Singh, a progressive farmer from Fazilka, said a dip in basmati prices last season already made many growers switch back to regular paddy this year. He said basmati prices are uncertain and depend on exporters, unlike the assured procurement on minimum support price (MSP) for regular paddy, adding that if prices do not recover this season, more basmati growers would switch to paddy. Popular basmati varieties in the state like 1509, 1121, and 1718 cover over 80% of the 6.8 lakh hectares area under basmati, but have been fetching falling prices. According to Ranjit Singh Jossan, vice-president of the Basmati Rice Millers and Exporters Association, the new duty could cause Indian exports to the US to drop by 50%-80%. "US accounts for 8%-10% of India's basmati exports. New tariffs will make Indian basmati costlier by $400 per tonne, while Pakistani basmati will remain competitive. This will particularly hurt small and medium exporters who are already struggling with thin margins and unsold stock," he said. The dual threats of foreign trade disruptions and domestic supply issues could prove to be a litmus test yet for Punjab's basmati success story, said Jossan. According to Ashok Sethi, director of the Punjab Rice Millers and Exporters' Association, a good monsoon this time is expected to yield a bumper basmati crop, which typically drives prices down. This supply increase, coupled with a negative market sentiment surrounding the high US tariff, will likely cause a decline. As a result, both exporters and growers are expected to be affected, with exporters becoming more cautious in their buying. Despite the US market's relatively small volume of 2.34-3 lakh metric tonnes annually, valued between $350 million and $418 million, it remains a crucial destination for Indian basmati due to its niche clientele, he said. Punjab's basmati processing capacity nearly doubled in the last two years, but its local production is not keeping pace. Millers have historically relied on surplus basmati from Uttar Pradesh and Madhya Pradesh to operate at full capacity. However, these states are now rapidly building their own milling infrastructure, which could cut off Punjab's raw material supply. In 2022-23, Punjab's basmati processing capacity stood at around 25 LMT per annum, with 80 rice mills operating. By 2024-25, the capacity went up to 45 LMT, with over 200 rice mills now operating across the state. The rapid expansion was fuelled by strong global demand for basmati and high price realisation in the export market, especially in premium destinations like the US, Europe, and the Middle East. Stay updated with the latest local news from your city on Times of India (TOI). Check upcoming bank holidays , public holidays , and current gold rates and silver prices in your area. Get the latest lifestyle updates on Times of India, along with Raksha Bandhan wishes , messages and quotes !
Hindustan Times
26-06-2025
- Business
- Hindustan Times
Chandigarh: No trace of ₹2,000-crore basmati consignments to Iran, say exporters
Amid the Iran-Israel conflict, consignments of basmati worth ₹ 2,000 crore is untraceable, exporters have said. The country's basmati trade, to which Punjab's produce contributes at least 40%, has suffered severely, they said. According to exporters, their communications with Iran traders have now become ineffective. (HT Photo) These consignments were sent during the past one month. All communications with Iran have now become ineffective, they say. 'We actually do not know where the consignments are, have they been delivered or stuck at Iranian ports, particularly Bandar Abbas, Bushehr and Chabahar,' said Ashok Sethi, director of the Punjab Rice Millers and Exporters' Association. Iran, a major importer of aromatic grain from India, annually takes grian to the tune of 7 to 9 lakh tonne at a tentative cost of ₹ 8,000 crore to ₹ 9,000 crore. In 2019, due to trade sanctions imposed on Iran by the US, the basmati export from India suffered badly. It has been witnessing recovery for the past two years. 'It was coming back on track, but this war has taken its toll,' Sethi said. Before the sanctions, India used to export 15 lakh tonne basmati alone to Iran, the half of which has been shifted to Pakistan. According to Sethi, Punjab's 1509 and 1121 varieties are much preferred by the Iranians. During sanctions, the grain was sent to the country through traders based in Dubai. He added that the Centre should play a proactive role in saving the trade, which is earning huge foreign exchange to the rune of ₹ 40,000 crore for the country. 'The war has ended, but the scenario is still uncertain. The entire trade season may be affected,' said Ranjit Singh Jossan, vice-president of another exporter association. 'Iran allows exports in phases. On June 1, they sanctioned import of 2.5 lakh tonne of basmati. When we were in the process of sending the consignments, the war erupted and the entire 2.5-lakh-tonne consignment is in doldrums as due to war, ports have become non-operational and the entire produce has been stuck at the ports,' said Jossan. He said that on July 21, the government of Iran would ban import to push its local crop. 'After that, the produce will not be allowed inside the country even if it has reached the ports. Even if some consignments have been received by local traders in Iran, there is no guarantee of payments,' he added. As the farmers in Punjab these days are transplanting paddy, a target of 7 lakh hectares has been fixed for the area under the aromatic crop. 'We are having a good monsoon. Hopefully, we will have a good crop and the war will have no impact when the crop matures,' said an official in the state agriculture department.
Time of India
10-05-2025
- Business
- Time of India
Research centre delay hurts Punjab basmati exports.
Chandigarh: Even as Punjab grapples with the dual challenge of farmers' struggle to grow pesticide-free basmati and ongoing efforts to wean them off water-intensive paddy, the state govt is yet to allocate the necessary land for a Centre-backed project. The proposed basmati research centre in Tarn Taran , intended to include basmati sample testing facilities, remains stalled, hindering a much-needed boost to the state's basmati exports in the competitive global Agricultural and Processed Food Products Export Development Authority ( APEDA ) had decided to set up the research centre, and the state govt initially offered to provide 14 acres of land in Khabba Rajputan village in Tarn Taran on a 30-year lease. It was to include a seed centre and training centre for delay comes amid the recent headwinds faced by Indian basmati exporters. Following a period of struggle due to the now-withdrawn minimum export price (MEP), the industry had to later deal with the complexities arising from the ongoing Iran-Israel conflict, further impacting their ability to sell produce in the global to Ashok Sethi, director of Punjab Rice Millers and Exporters' Association, the stalled basmati research centre was vital to prevent European rejection of export orders due to pesticide contamination. Operation Sindoor India-Pakistan Tensions Live Updates: India hits back after Pakistan violates ceasefire; Nagrota sentry hurt in brief gunfire Operation Sindoor Live Updates: Drones shot down at multiple places in J&K as Pakistan violates bilateral understanding Pak drones enter Indian airspace, explosions heard just hours after truce deal He highlighted the expensive alternative of private lab testing that costs around Rs 10,000 per sample. "A local exporter is now setting up his own laboratory. Every year, 4-5 containers are sent back from Europe. In August last year, the then secretary, agriculture and APEDA officials visited the site. The project is delayed despite the state govt's push for crop diversification," he APEDA official added that the state-of-the-art research centre was to be funded by APEDA but is held back for want of necessary land by the state govt. The proposed research centre in Tarn Taran was envisioned to ensure the quality of Punjab's basmati exports, he stands as a major contributor to India's annual basmati rice exports, which are valued at approximately Rs 50 thousand crore. With a production level of 3.84 lakh metric tonnes in the last recorded period, the state accounts for a substantial 42.7% of the total national output. Key export destinations for Indian basmati in 2023-24 included Saudi Arabia, Iran, Iraq, the United Arab Emirates, the USA, and Yemen Republic."The absence of such a facility leaves Punjab's significant basmati production vulnerable to international quality standards, potentially jeopardising its market share and the income of its farmers. The state govt's inaction on providing land for this vital project raises questions about its commitment to both crop diversification and supporting the basmati sector," said Amarjit Singh, a basmati exporter from PUNJAB HAS BANNED 10 INSECTICIDESThe state govt issued a gazette notification in 2023 to prohibit the sale, stock, and distribution of the insecticides on the basmati crop for being a "potential constraint in export and consumption of basmati rice." There is a risk of more than the maximum residual level (MRL) of pesticides on account of the use of the agro-chemicals, it said. MSID:: 121056937 413 |
