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PUNE: The price of Basmati rice has fallen to Rs 40 per kg for the first time in 10 years. "It used to cost Rs 55 a kg last fiscal but has now fallen to Rs 40 a kg, bringing it within the reach of the common man," says Rajesh Shah, a senior trader and market expert in the city.
In 2000-01, Basmati was sold at Rs 35 a kg and since then the price has escalated every year. The premium varieties of Basmati, which currently cost around Rs 60 a kg, will also come down once supply of the variety increases.
The long-grained rice, known for its aroma and flavour, is grown in India and Pakistan. The main export market for Indian Basmati are the countries in Europe and Africa. Every year, export has been increasing by 10 per cent, pushing domestic prices upwards. Now, however, exports have decreased and this is reflected in the price.
Gurnam Arora, Delhi-based former president of the All-India Rice Exporters' Association said, "An increased domestic production and lower export of Basmati last year resulted in abundant availability in the domestic market. These factors brought down prices of this elite variety. Basmati production in the fiscal 2010-11 was 50 lakh tonne in the country, which is expected to increase by 20 per cent in 2011-12. The country exported 23 lakh tonnes Basmati rice in 2010-11 fiscal. All the varieties of Basmati are showing a dip in prices, including long-grain Basmati and broken varieties like 'mogra', 'dubar' and 'tibar', he said.
Basmati prices are generally declared in November or December, as the crop starts arriving in the market. The annual contracts of supply and export are signed during this period. Reasons for lower export include the economic problems in the countries of the European Union as well as unrest in Arab countries which delays the payments. During the first half of the current financial year there was a delay of about 90 days in payments, which exporters found unacceptable. "Money gets stuck for about three months which is not good for traders who need cash for daily transactions. Most of the exporters decided to reduce their export due to such unfavourable conditions," Shah said.
Improvement in processing technology is another reason for the rise in Basmati production. The paddy to Basmati conversion loss used to be around 15-17 per cent and this has now come down to 10 per cent.
The improvement in the processing technology also prevent the grain from breaking, said Shah.
Source: The Times of India, Pune