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A SYB.M.

S PROJECT ON

Submitted to Prof. Jalpa Parekh of BMS


Department
Group members:

Danish Choudhari (39)


Jaffer Choudhari (40)
Khatija Daudi (05)
Mayuri Joshi (07)
We are greatly honoured and privileged
to thank and acknowledge those people who
have contributed directly or indirectly in
making this project successfully.
Firstly with gratitude, we would thank
Our Principal Sir, Prof. A.E. Lakdawala for
giving us the opportunity for making this
project and extracting good knowledge from
this project. We also thank Our Joint-
Principal, Prof. Kamala A.; Vice-Principal Prof.
Mallika and Our BMS Co-ordinator, Prof.
Renu K. in this context. With immense
gratitude, we would like to thank Our
Subject Co-ordinator, Prof. Jalpa Parekh, for
guiding us throughout the project.
We would also thank all the sources from
whom we have collected the primary data
and lastly our group members who have
been supportive and co-operative
throughout.
SR. CONTENTS PG.N
NO. O.
1. Introduction 1
2. Origin and history of Rice in India 2
3. Production of Rice in India 2
4. Classification of Rice 3
5. Branding of rice 5
6. Factors influencing prices of rice 6
7. Problems of Rice exports from 7
India
8. Suggestions for sustaining Rice 8
exports
9. Prospects of Rice exports from 9
India
10. Incentives to Rice exporters of 10
India
11. Restrictions on Exports 11
12. Statistics & Calculations of Rice 12
Exports from India
13. Case Study 15
14. Conclusion 17
15. Agencies exporting rice 18
16. Primary data: 18
i. Information on Karari Rice
Mills
ii. Questionnaires
17. Bibliography 19

INTRODUCTION

Worldwide, India stands first in rice area and second in rice production, after
China. It contributes 21.5 percent of global rice production. Within the country, rice
occupies one-quarter of the total cropped area, contributes about 40 to 43 percent of
total food grain production and continues to play a vital role in the national food and
livelihood security system. However, India did not become a major rice exporting
country for a long time. Its share in world rice trade, mainly in the form of small-volume
exports of highly prized basmati rice, was insignificant (5 percent). It was not until the
mid-1980s that the quantum of export started to grow, from 110000 tonnes in 1978-79
to 890613 tonnes in 1994-95 and to a record 5.5 million tonnes in 1995-96, second
only to Thailand (at 5.9 million tonnes).
Rice is one of the important
cereal food crops of India. Rice
contributes about 43% of total food
grain production and 46% of total cereal
production in the country. It continues to
play vital role in the national exports.
The percentage share of rice in total
national export was 4.5% during 2005-
06. The percentage share of agriculture
export in total national export was
18.25%, whereas the percentage share of
rice export in total agriculture export
was 24.62% during 2005-06. Thus, rice
export contributes nearly 35% of total
agriculture export from the country.
Among the exporting countries, Thailand, Vietnam, India and Pakistan are the
major countries exporting rice in sizeable quantity. India is one of the richest countries
in the world in terms of possessing tremendous diversity in rice varieties. There are
different varieties of rice-depending on the weather, soil, structure, characteristics and
purposes.
Rice is grown under a damp warm climate. A temperature range of 20ºC to 37.7º
C (68º F to 100º F) is required for the optimum growth of rice. Rice being a semi-aquatic
crop grows best under submerged, waterlogged conditions. Rice is able to tolerate a
wide range of soil reactions, but has a preference of acidic soils. Rice cultivation is
found in all the states of India, but West Bengal, Uttar Pradesh, Madhya Pradesh,
Punjab, Orissa and Bihar are the major rice producing states. About 600 improved
varieties of Indica rice have been released for cultivation since 1965.

ORIGIN AND HISTORY OF RICE IN INDIA


India is an important center of rice cultivation. The rice harvesting area in India is
the world's largest. The two major rice varieties grown worldwide today are Oryza
sativa indica and Oryza sativa japonica. According to research studies, they owe their
origins to two independent events of domestication thousands of years ago.
Historians believe that while the indica variety of rice was first domesticated in
the area covering the foothills of the Eastern Himalayas (i.e. north-eastern India),
stretching through Burma, Thailand, Laos, Vietnam and Southern China, the japonica
variety was domesticated from wild rice in southern China which was introduced to
India before the time of the Greeks.
The earliest remains of cultivated rice in the sub-continent have been found in the
north and west and date from around 2000 BC. Perennial wild rices still grow in Assam
and Nepal. It seems to have appeared around 1400 BC in southern India after its
domestication in the northern plains. It then spread to all the fertile alluvial plains
watered by rivers. Cultivation and cooking methods are thought to have spread to the
west rapidly and by medieval times, southern Europe saw the introduction of rice as a
hearty grain. Some says that the word rice is derived from the Tamil word ‘Arisi’.
Rice is first mentioned in the Yajur Veda (c. 1500-800 BC) and then is
frequently referred to in Sanskrit texts. In India there is a saying that grains of rice
should be like two brothers, close but not stuck together. Rice is often directly associated
with prosperity and fertility; hence there is the custom of throwing rice at newlyweds. In
India, rice is always the first food offered to the babies when they start eating solids or to
husband by his new bride, to ensure they will have children.

PRODUCTION OF RICE IN INDIA


From a nation dependent on food imports to feed its population, India today is
self-sufficient in grain production and also has a substantial reserve. The progress made
by agriculture in the last four decades has been one of the biggest success stories of
liberal India. Agriculture and allied activities constitute the single largest contributor to
the Gross Domestic Product, almost 33% of it. Agriculture is the means of livelihood of
about two-thirds of the work force in the country.
The demand for rice in India is projected at 128 million tonnes for the year 2012
and will require a production level of 3,000 kg/hectare significantly greater than the
present average yield of 1,930 kg/hectare. Government of India is targeting to achieve
production of 129 million tonnes of rice by 2011-12 with the growth rate of 3.7% along
with other food grains. The production of rice in India has shown an increasing trend
which is evident from the Table given below:

PRODUCTION CONSUMPTION
PRODUCTION RICE (in
YEAR YEAR
(in mn tonnes) grams)
2000-01 53.63 2000 220.0
2001-02 74.29 2001 204.9
2002-03 82.54 2002 215.0
2003-04 86.08 2003 201.8
2004-05 89.68 2004 205.4
2005-06 84.98 2005 206.4
2007-08 93.08 2006 208.1
Source: Federal ministry of Agriculture, Govt. of India

CLASSIFICATION OF RICE
India is one of the important countries in the world in export of rice. India's
exports are expected to go up further during current financial year. Hence, Indian rice
exports are set to reach second place in the world markets after Thailand edging out
Vietnam in the process as per the report of the Food and Agricultural Organisation.
Indian rice is classified into three types:
A. BASMATI RICE
Rice export from India constitutes the major share of Basmati rice. Nearly two-
third of Basmati rice produced in India is exported. Basmati rice is the leading aromatic
fine quality rice of the world trade and it fetches good export price in the international
markets. In fact, Basmati rice is a gift from "Mother Nature" to the Indian sub-continent
and grows in the Indo-Gangatic plains only.
The meaning of Basmati can be derived from "bas" which means aroma and
"mati" meaning sense. Thus the word Basmati implies 'ingrained aroma'. So it is the
aroma that gives basmati its novel characteristics unmatched by any other rice grain
anywhere else in the world. Many scented varieties of rice have been cultivated in the
Indian sub- continent from time immemorial but basmati distinguishes itself from all
other aromatic rice due to its unique aromatic characteristics coupled with silky texture
of its long grain. Now, it is still considered "dream of the masses" and "charm of the
classes".

Golden parboiled Raw Basmati Silky raw basmati


rice

Gulf region remains the major markets for Indian basmati rice and inside Gulf,
Saudi Arabia accounts for the major chunk of basmati imports from India. Pakistan is
the sole competitor for India in the international market for basmati rice. During 2005-
06, 2006-07 and 2007-08, total quantities of basmati rice exports from India were 5.98
lakh million tonnes, 6.38 lakh million tonnes and 8.52 lakh million tonnes in which the
percentage share of Asia was 85.69%, 82.12% and 73.38% respectively.
The export to North America has also increased in the same order from 1.39%
during 1998-99 to 5.28% during 2000-01. However the export to other countries remains
constant with slight fluctuation from year to year. India's major markets for basmati rice
exports have been Saudi Arabia, Australia, Austria, Belgium, Bahrain, France,
Germany, U.K., Denmark, U.S.A., Canada, Belgium, Kuwait, Italy, Oman, Yemen,
Netherlands, Jordan, Indonesia, etc. In fact, Saudi Arabia traditionally has been the
largest market for Indian basmati rice.

B. NON-BASMATI RICE
Major destinations for India's non-basmati rice exports are Bangladesh,
Australia, Bahrain, Ethiopia, Djibouti, France, Germany, U.K., Hong Kong, Korea,
Sri-Lanka, Maldives, Mauritius, Malaysia, Nigeria, Ivory coast, Indonesia, Nepal,
Oman, Qatar, Russia, South Africa, Saudi Arabia, Somalia, Singapore, U.A.E.
Y.A.R., etc. Competing countries in the international markets for India for the exports of
non-basmati rice are Thailand, Vietnam, Burma, China, U.S.A. and Pakistan. Major
quantity of non-basmati rice is exported to Asia continent.
During 2004-05, 2005-06, 2006-07 and 2007-08, a total quantity of 9.59 lakh
million tonnes, 9.28 lakh million tonnes, 28.75 lakh million tonnes and 7.08 lakh million
tonnes were exported to Asia continent which were 48.20%, 51.66%, 65.86% and
56.28% of total export of non-basmati rice from India to Asia, respectively.
After Asia, non-basmati rice is exported from India to Africa continent. During
2004-05, 2005-06, 2006-07 and 2007-08, a total quantity of non-basmati rice exports
from India to Africa were 5.39 lakh million tonnes, 5.59 lakh million tonnes, 10.67 lakh
million tonnes and 3.24 lakh million tonnes, in which the percentage share of Africa
continent was 27.09%, 31.14%, 24.44% and 25.73% respectively of total export of non-
basmati rice from India.
Next to Africa continent, Europe continent has been importing non-basmati rice
from India during 2004-05, 2005-06, 2006-07 and 2007-08. The exports of non-basmati
rice from India to other continents are very meager. The exports to Europe continent
during the last few years were an average more than 1.5 lakh million tonnes per year
C. PARBOILED RICE
Indian is exporting parboiled rice to Middle East and African countries, as these
countries prefer parboiled rice.

BRANDING OF RICE
It's sign of the changing times. The imprint of a brand is getting bolder, even in a
down-to-earth commodity market like rice. Along with increasing consumer awareness
and changing preferences, the rice industry is witnessing change. No more is the friendly
neighbourhood grocer's word all there is to go by. In a country that produces thousands
of varieties of rice, branding has come to play a role in domestic as well as export
markets. The brand is the new mantra for success and basmati, also known as the 'king
of rice', is in the midst of the action.

LAL QILLA TOPS THE LIST


India accounts for about 70 percent of the world's basmati production of 1.25
million metric tonnes. Of this, nearly 3.5 lakh metric tonnes is consumed in India and the
rest is exported. The industry is growing rapidly the world over with basmati becoming
increasingly popular. Of the total domestic basmati consumption of 3.5 lakh metric
tonnes, branded basmati accounts for about 1.25 lakh metric tonnes and has been
growing at the rate of 20 per cent a year. The Indian branded basmati market is
estimated to be worth between Rs. 600-700 crore. Rice producers have picked up the
market trend towards preference for branded basmati and have jumped on to the
bandwagon so that there are more than 100 regional brands of rice in India. The
trendsetter has been Amar Singh Chawalwala of Amritsar, whose Lal Quila brand is
acknowledged as the best selling rice brand in India, notching up sales of Rs 100 crore a
year.

BASMATI RICE BRANDS OF INDIA

In a tough and a competitive international market of rice, it has become very much
necessary to give a brand name to even a food grain, rice. With the increase in consumer
awareness and shift in the position of customer from a mere buyer to the “King Of the
Market”, it has become utmost essential to give a name to the essential food crop of
India to survive in the international market. The brand is the new mantra for success and
basmati, also known as the 'king of rice', is in the midst of the action.
Of the total domestic basmati consumption of 3.5 lakh metric tonnes, branded
basmati accounts for about 1.25 lakh metric tonnes and has been growing at the rate of
20 percent a year. The Indian branded basmati market is estimated to be worth between
Rs. 600-700 crore. Rice producers have picked up the market trend towards preference
for branded basmati and have jumped on to the bandwagon so that there are more than
100 regional brands of rice in India. Some famous brands available in India, USA,
Canada, U.K., Norway, Denmark, Holland, Sweden, Australia, Kuwait, Saudi
Arabia, UAE and many other countries are as follows :
• Lal Qilla
• Double Diamond Brand Basmati Rice
• Resham brand
• Tilda Basmati rice
• Pari Basmati Rice
• Adora Basmati
• Dawat Basmati
• Kohinoor Basmati
• Blue Label Basmati
• Lal Haveli Basmati

FACTORS INFLUENCING THE PRICE OF RICE


1. Weather: Role of weather in rice production is immense. Temperature, rainfall
and soil moisture are the important parameters that determine the crop condition.
Further, natural calamities can also affect crops. Markets keep watch of these
developments.

2. Minimum Support Price: Changes in the minimum support prices (MSP) by the
government also have immense impact on the price of rice.
3. Substitute Product: Availability of substitute products at cheaper rate may lead
to weakness in demand. This situation happens especially when the main products
price tends to become higher.

4. Consumption: Rice consumption depends on two factors - population and


income. For example, rice is the staple food of Asia. Low-income groups consume
more rice according to the per capita income increase. But as the income
increases, there arrives a point when the consumption starts to dip. Income growth
and reduction in population result in a low consumption of rice.

5. Seasonal cycles: Seasonal cycles are present in rice cultivation. Price tends to be
lower as harvesting progresses and produce starts coming into the market. At the
time of sowing and before harvesting price tends to rise in view of tight supply
situation.

6. Demand: Import demands as well as domestic demand influences the price of rice
in domestic as well as international market.

7. New technology: Breakthrough in the technology may increase the productivity


and would lead to more supply. This may bring some softness in the price.

PROBLEMS OF RICE EXPORT FROM INDIA

India is facing stiff competition in the world markets for export of rice. Besides,
there are many domestic problems for rice exporters. If these internal problems are
relaxed to the extent possible, the exporters may find easy way to boost rice export and
such measures will go a long way to sustain the exports. Some of the major problems
are:

1. High tax rate: Indian rice is costlier in the international market as compared to other
competing countries in the world because of imposing of various taxes on rice
exports. These taxes include- Purchase Tax (on indirect export), Market Fees,
Rural Development Fund, Administrative Charges, etc. as per the state
Government policy. In Pakistan, rice meant for exports specially the branded ones,
duties are extremely low or duty free.

2. Minimum Support Price: The Minimum Support Price (MSP) for paddy is
enhanced every year by the Government of India. Due to MSP, farmers are free to
sell in the open market or to the Government at the MSP depending on what is more
advantageous to them.
3. High production cost: The production cost goes up due to increase in the cost of
inputs used for paddy cultivation. That is why when paddy is converted to rice, it
becomes costlier making it internationally uncompetitive.

4. High competition in international markets: Rice production meant for export


purpose is having subsidy in other countries like Thailand, Vietnam and Pakistan,
which reduces the cost of production and thereby reducing the cost of rice. Therefore,
the export price of rice of such countries is more competitive in the international
markets compared to Indian rice.

5. Inelastic prices: Indian rice prices are inelastic due to relatively high cost of
production whereas the major rice producing nations have decreased the price to
capture the international markets.

6. Lack of proper infrastructural facilities: Rice mills have not been fully
modernized to ensure high milling recovery and reduce the percentage of broken
rice. Apart from this, there is lack of proper arrangements for production of sufficient
quantity of quality seeds needed for cultivation of rice for export purposes.

7. Quality problems of Basmati rice: Indian Basmati rice is facing aroma problem,
because intensity of aroma in traditional basmati varieties is not as high as it used to
be. Post harvest handling of produce is another important aspect. Generally, farmers
are harvesting the crop at different moisture levels and keeping the produce at
higher moisture level for a longer period will impair the intensity of aroma. In
absence of genetically pure seed of basmati varieties, a variation in plant height, grain
size and maturity of the crop is found. This is one of the major reasons for poor
quality of basmati rice.

SUGGESTIONS FOR SUSTAINING RICE


EXPORT
Rice export constitutes a considerable share in the national exports. Keeping in
view the importance of rice in the national export items, concerted efforts are required to
be made to further promote the export of rice. There is a good scope for India to take
advantage of the new trade opportunities for promoting the export of rice. This can be
achieved if production is made as per the requirements of international markets by
increased investment in Research and Development coupled with export friendly trade
policies. The following are few of the measures suggested to sustain the export of rice in
future:

1. Breeding programme may be initiated to develop high yielding export quality rice
(Basmati, Non-Basmati, Long Grain Rice, etc.) to enable the exporters to sustain
their export in future.
2. Survey may be conducted to identify export quality belts/zones for production of
rice to meet the requirement of exports.
3. Extension activities may be strengthened to educate the cultivators for production
of quality rice to match the standards of international markets.
4. Low cost production technology may be developed to bring down the cost of
production to enable the exporters to compete with competing countries in the
international markets.
5. Proper arrangements may be made for procurement and processing of rice export
purpose as per the requirement of international markets.
6. Proper arrangements may be made for production of pure quality seeds and
making them available to the farmers at subsidized rates.
7. In case of basmati varieties, crop should not be allowed to lodge and there should
be proper water management in the field. If these are not attended properly, such
situation may affect both aroma and linear kernel elongation.
8. Post harvest operation is also very important. After harvesting, if produce is
allowed to remain at higher moisture level for a longer period, it will impair the
intensity of aroma.
PROSPECTS OF RICE EXPORT FROM INDIA
India is facing stiff competition in the International markets from Thailand,
Vietnam, U.S.A. and Pakistan. There was a considerable growth in the export of rice
from India during the recent past, particularly in the case of non-basmati rice. There are
several factors responsible for this growth. In fact exports depend not only on our ability
to sell, but also on the willingness of importers to buy. Sometimes major
markets/importers used to cut down their import due to their internal economic problems
or good crop harvest and trade also cut down inventories and people reduce spending.
All these measures reduce imports during that particular year. The prospects of export of
basmati and non-basmati rice from India are discussed herewith:

BASMATI RICE

Awareness about basmati rice is spreading among different strata of the society in
the country and abroad. Basmati rice is possessing unique grain, cooking, eating and
digestive qualities. Hence, majority of people in the country and abroad have developed
liking for basmati rice. Because of its superfine quality, basmati rice is most preferred
and also meant for high premium value in the national and international markets. Thus,
basmati rice is also stated to be 'Pearl' of rice.
Commercially, Taraori Basmati, Basmati-370 and Basmati Type-3 are very
popular. All these three varieties are similar in starch characteristics but based on grain
dimensions Taraori Basmati is preferred much over Basamati-370. Similarly Basamati-
370 is preferred more over Basmati Type-3. Pusa Basmati-1 has been well accepted by
the trade and there are good prospects for export. In fact, Pusa Basmati-1 is at present
most profitable variety in rice, in spite of being highly susceptible to major insects, pests
and diseases. Under proper crop management condition farmers can get 4-6 tonnes
paddy yield per hectare. This variety is much favoured by the farmers, traders and
consumers.
With the every coming year, domestic as well as international demand for basmati
rice is increasing. If desired aroma in basmati rice along with other quality
characteristics is maintained, these measures may help to boost the export of basmati
rice from India.

NON-BASMATI RICE
Non-basmati rice exports have also suffered much due to the competition from
exporting countries like Thailand, Vietnam and Pakistan because of their low cost of
production. In the recent past export of non-basmati rice was fluctuating year after year
due to various reasons. If rice exporters made their sincere efforts with Govt. supporting
export policy, non-basmati rice export is expected to increase in future.

INCENTIVES TO RICE EXPORTERS OF INDIA


Various incentives are given to the exporters of rice, since Rice is most important
cereal crop of India. Also to make Indian Rice competitive in the international markets,
Government of India keeps on coming with new export friendly policies as well as
incentives for the rice exporters.
The decision of the Union Government to allow non-basmati rice exports to 21
African countries to the extent of one million tonnes is a welcome move, as it will help
the millers and the farmers, but clear guidelines have to be formulated and tenders
should be called for to ensure transparency, according to Vinod Agarwal, President of
AP Rice Exporters’ Association.
He said in an interview here on Tuesday that the Directorate-General of Foreign
Trade had issued a notification earlier this month allowing rice exports to 21 African
countries. Three Government agencies - MMTC, STC and PEC - had been appointed
to facilitate exports to these.
“But our past experience shows that there is no transparency in such transactions.
Three or four major exporters manage to corner the contract and the others are denied
the benefit. It is of no benefit to the millers or farmers and only the three or four big
players stand to gain. Therefore, we want transparency in the transactions. Tenders
should be floated and all should be given a fair chance," said Agarwal.
He said that after imposition of ban on rice exports in 2007 some five lakh tonnes
of rice was allowed to be exported to Bangladesh in government-to-government deals
but "only three or four major exporters grabbed the contracts."
He said the current situation in Andhra Pradesh market was causing concern, as
the FCI was not buying rice from the millers and the latter were therefore not willing to
buy paddy from the farmers. "The FCI is not in the market and exports are not allowed.
There is severe scarcity of storage space, as wheat from the North is dumped in the
godowns here. Therefore, there is a lull and crisis in the market.

EXPORT SUBSIDIES
Export subsidy reduction commitments have been made under the Uruguay
Round Agreement on Agriculture (URAA) by Colombia, Indonesia, Uruguay, the
EC and the United States. The actual use of export subsidies has fallen short of the
aggregate ceiling, although information is difficult to get even from the WTO. Proposals
for further reduction commitments are likely to meet opposition from the EC. Other
issues have arisen in relation to export competition in rice, in particular the granting of
export credits by the United States of America. It should be noted, however, that export
credits are also commonly used in government-to-government deals, although there is
little information available in connection with such practices.
Export subsidies have been used by India since mid-2001 to promote exports of
rice held by the government Food Corporation of India. According to the WTO, India
is not eligible to use export subsidies on rice, but the country claims that under the
URAA (Article 9-4) the country is exempt from commitments on export subsidies for
marketing, processing and transportation. While this position is questionable, the
country has to date not been challenged on that account by other countries in the WTO.

RESTRICTIONS ON EXPORTS
The Commerce Ministry’s decision permitting export of up to 10 lakh tonnes (lt)
of rice to African countries through parastatals is subject to the shipments containing a
minimum 25 per cent brokens content.
“The rice to be exported shall be with a minimum of 25 per cent of brokens”, the
Directorate General of Foreign Trade’s (DGFT) notification, dated May 6, has said. “On
the other hand, you have a condition of a minimum export price (MEP) of $1,100 a
tonne below which no basmati rice can be shipped out. And now, the same Commerce
Ministry is saying that you can export non-basmati rice only if it has a minimum 25 per
cent brokens, which corresponds to the most commonly consumed grades here”, said
Mr. Vijay Sethia, former President of the All-India Rice Exporters’ Association
(AIREA).
According to him, if the Government was keen to gradually ease restrictions on
rice exports, the best way would have been to lower the MEP and make it applicable to
both basmati as well as non-basmati grain. “By this, you will ensure that only high-end
rice, which includes premium non-basmati varieties such as Ponni, Swarna Masuri and
Red Matta, is exported, while the rice consumed by ordinary segments remains within
the country”, he added.
The 10 lt of rice permitted to be exported has been allocated among 21 countries.
This includes 1,44,900 tonnes to Cote D’Ivorie, 1,41,300 tonnes to Senegal, 1,17,100
tonnes to Nigeria, 96,000 tonnes to Liberia, 72,400 tonnes to Togo, 68,800 tonnes to
Ghana, 48,300 tonnes to Egypt, 38,500 tonnes to Sierra Leone, 36,250 tonnes to
Gambia, 24,200 tonnes each to Burkina Faso, Mali, Somalia, Benin, Guinea Bissau,
Mozambique and Zambia, 21,700 tonnes to Cameroon, 15,000 tonnes to Mauritius,
12,100 tonnes each to Djibouti and Zanzibar, and 5,550 to Tunisia.

STATISTICS AND CALCULATION OF RICE


EXPORTS FROM INDIA

AVERAGE EXPORT PRICE AND ITS CALCULATION


Total quantity of rice exported and its value realized in rupees have been taken
separately for basmati and non-basmati rice and then the value of export divided by the
quantity of rice exported to arrive at the average export price of rice per quintal year
wise for basmati & non-basmati.
We give below a year wise representation of average export price of basmati rice
and non-basmati rice in India:
Basmati Rice Non-basmati Rice
Year
Rs. Per Quintal Rs. Per Quintal
2000-01 1,957.00 759.00
2001-02 2,279.00 819.00
2002-03 2,385.00 968.00
2003-04 2,841.00 939.00
2004-05 3,140.00 1,009.00
2005-06 2,789.00 1,070.00
2006-07 2,543.00 1,139.00
2007-08 2,762.00 864.00

It is seen from the above table that export price of basmati and non- basmati rice
has fluctuated significantly year after year. The reason for fluctuation in average export
price of rice is attributed to different quantity and quality of rice exported to
different countries during different years. A particular country may import a
particular quality/grade of rice in one year and the same country may import another
quality/grade of rice during next or subsequent years. Thus, different quality and
quantity of rice exported to different countries at different export price rate may
probably be the reason for fluctuation of average export price of rice in India.

EXPORT EARNINGS FROM RICE

The export earnings from the export of total rice (Basmati and other than Basmati)
during 1998-99 accounted for 4.38% of total national export earnings. The total
earnings from Basmati Rice during 2005-06 were 1.33% of total national export
earnings. Similarly, export earnings from agricultural exports during 2005-06 were
17.81% of total national export earnings. The percentage share of rice exports to the total
agricultural exports during was 24.58% in which the share of Basmati Rice was 7.5%.
This is more clearly shown in the following table which shows the export earnings of the
country:
Item Year 2005-06
Total National Exports 1,41,603.53 Rs. crores
Total Agricultural Exports 25,224.63 Rs. crores
Total Exports of Rice 6,200.80 Rs. crores
Total Exports of Basmati Rice 1,886.25 Rs. crores
Percentage share of Basmati to the Total Rice Exports 32.42%
Percentage share of Rice Exports to Total Agricultural
24.58 %
Exports

EXPORT OF BASMATI RICE FROM INDIA

Basmati Rice, the leading aromatic fine quality rice in world trade, fetches good
export price in international market for its three distinct quality feature: pleasant aroma,
super fine grains and extreme grain elongation. Nearly two third of Basmati Rice
produced in India is exported. India accounts for about 70 percent of the world's
basmati production. Each year, India produces nearly 2.25 lakh tonnes of rice. Almost
1.25 lakh tonne is consumed by India’s residents. The rest is left for exports. The
countries were Basmati rice is exported include Saudi Arabia, UAE, European Union
countries, USA, UK, Germany, Australia, Austria, Russia, Singapore, Iran, Kuwait,
Behrain, Spain, Italy, France, Denmark and Norway.
According to a latest report by APEDA, till February 2006, basmati export
had already crossed one million tonne mark and stood at 11.4 lakh tonne, which
has been valued at Rs 2,775 crore.

Year wise Export of Basmati Rice


Export of Basmati rice
Year Quantity ('000 tonnes) Value (Rs. in Crores)
2002-03 593.32 1,685.62
2003-04 600.60 1,866.25
2004-05 ** 2142.00
2005-06 710.29 **
2006-07 1140.00 2775.00

EXPORT OF NON-BASMATI RICE FROM INDIA

India is also exporting a substantial quantity of non-basmati rice to various


countries in the world. However, the export of non-basmati rice has been fluctuating
year to year due to weather conditions affecting the production of non-basmati rice. The
export of non-basmati rice from India was on its peak during 2004-05 and a total
quantity of 45.41 lakh metric tons was exported to different countries in the world.
Again the export crossed to 43.66 lakh metric tons during 2006-07, but during
subsequent years, the export of non-basmati rice again came down significantly due to
various reasons. The countries where Non-Basmati Rice is exported include Saudi
Arabia, Bangladesh, Australia, Bahrain, Ethiopia, Hong Kong, Korea, Sri-Lanka,
Maldives, Mauritius, U.A.E., Malaysia, Qatar, Nepal, Indonesia, Somalia, Singapore,
etc.
Year wise Export of Non-Basmati Rice from India
Export of Non-Basmati Rice
Years Quantity ('000 tonnes) Value (Rs. in Crores)
2003-04 565.19 225.46
2004-05 448.50 340.47
2005-06 4,540.70 3,717.41
2006-07 1,989.04 1,924.72
2007-08 1,795.74 1,685.37

CASE STUDY
In late 1997, an American company RiceTec Inc. was granted a patent by the US
patent office to call the aromatic rice grown outside India 'Basmati'. RiceTec Inc. had
been trying to enter the international Basmati market with brands like 'Kasmati' and
'Texmati' described as Basmati-type rice with minimal success. However, with the
Basmati patent rights, RiceTec would be able to not only call its aromatic rice Basmati
within the US, but also label it Basmati for its exports. This has grave repercussions for
India and Pakistan because not only will India lose out on the 45,000 tonne US import
market, which forms 10 percent of the total Basmati exports, but also its position in
crucial markets like the European Union, the United Kingdom, Middle East and West
Asia. In addition, the patent on Basmati is believed to be a violation of the fundamental
fact that the long grain aromatic rice grown only in Punjab, Haryana, and Uttar Pradesh
is called Basmati.
According to the Agricultural and Processed Food Products Export
Development Authority (APEDA), India is the second largest producer of rice after
China, and grows over a tenth of the world's wheat. RiceTec Inc was issued the Patent
number 5663484 on Basmati rice lines and grains on September 2, 1997.
According to Dr. Vandana Shiva, director of a Delhi-based research
foundation which monitors issues involving patents and biopiracy, the main aim for
obtaining the patent by RiceTec Inc. is to fool the consumers in believing there is no
difference between spurious Basmati and real Basmati. Moreover, she claims the "theft
involved in the Basmati patent is, therefore, threefold: a theft of collective
intellectual and biodiversity heritage on Indian farmers, a theft from Indian
traders and exporters whose markets are being stolen by RiceTec Inc, and finally a
deception of consumers since RiceTec is using a stolen name Basmati for rice which
are derived from Indian rice but not grown in India, and hence are not the same
quality."
In an official release, the government of India reacted immediately after learning
of the Basmati patent issued to RiceTec Inc., stating that it would approach the US
patent office and urge them to re-examine the patent to a United States firm to grow and
sell rice under the Basmati brand name in order to protect India's interests, particularly
those of growers and exporters. Furthermore, a high level inter-ministerial group
comprising of representatives of the ministries and departments of commerce,
industry, external affairs, Council for scientific and industrial research (CSIR),
Agriculture, Bio-technology, All India Rice Exporters Association (AIREA),
APEDA, and Indian Council of Agricultural Research (ICAR) were mobilized to
begin an in-depth examination of the case. The government of India was particularly
concerned about the patenting of Basmati.
In the presence of widespread uprising among farmers and exporters, the nation of
India as a whole felt confident of being able to successfully challenge the Basmati patent
by RiceTec Inc. The law firm representing India in the dispute, Sagar and Suri,
criticised the procedures for granting patents in the US claiming it is diametrically
opposite to the one followed in India and Europe. According to them, India first
examines a patent application, then widely publishes it for third parties to challenge, and
only then grants the patent. However, the US keeps the patent application a closely
guarded secret and grants it without allowing other parties to challenge it.
Indians feel that the US government's decision to grant a patent for the prized
Basmati rice violates the International Treaty on Trade Related Intellectual Property
Rights (TRIPS). The president of the Associated Chambers of Commerce
(ASSOCHAM) said Basmati rice is traditionally grown in India and Pakistan and
granting patent to it violated the Geographical Indications act under the TRIPS. As a
result, it is safe to say Basmati rice is as exclusively associated with India and Pakistan
as Champagne is to France and Scotch Whiskey is to Scotland.
In the wake of the problems with patents that India has experienced in recent
years, they have now realized the importance of enacting laws for conserving
biodiversity and controlling piracy as well as intellectual protection legislation that
conform to international laws. There was a widespread belief that RiceTec Inc took out a
patent on Basmati only because of weak, non-existent Indian laws and the government's
philosophical attitude that natural products should not be patented. According to some
Indian Experts in the field of genetic wealth, India needs to formulate a long-term
strategy to protect its bio-resources from future bio-piracy and or theft.
The type of measure being utilized was accusing the RiceTec Inc and the US of
violating the Geographical indication act of the TRIPS agreement in the WTO. But first,
India and Pakistan filed a petition to the US patent office to re-examine the patent on
Basmati claiming Basmati has been grown in their regions for thousands of years and is
common knowledge in India and thus cannot be patented.
CONCLUSION

India is one of the richest countries in the world India in terms of possessing
tremendous diversity in rice varieties. There are different varieties of rice-depending on
the weather, soil, structure, characteristics and purposes.
The “multifunctionality” of agriculture in terms of environmental, social and
cultural concerns is being used to defend the permanence of blue and green box
payments. In Japan, most of the emphasis on multifunctionality and food security is in
relation to rice. In developed countries where rice is a non-marginal crop, the
elimination of blue or green box support would considerably impair the sector. Rice
production sites are often the natural habitat of a wide variety of birds and plants. Water
management in ricelands ensures that the soil desalination process essential to the
maintenance of land fertility takes place. Environmental concerns are consequently a
frequently used weapon in defence of the sector.
Food safety is not particularly relevant to rice, although there is increasing
concern regarding GMOs (genetically modified organisms). While some rice varieties
are being developed with new genes (e.g. carotene-enriched rice), they are not yet traded
internationally.
According to Dr. Richaria, one of the most eminent rice scientists of the world,
400000 varieties of rice existed in India during the Vedic period. He estimated that, even
today 200000 varieties of rice exist in India which is indeed an exceptionally high
number. This means that even if a person eats a new rice variety every day of the year he
has to live for over hundred years without reusing a variety. Every variety has a specific
purpose and utility. The harvesting area of rice in India is the world's largest.
Rice is an important aspect of life in the Southeast and other parts of Asia. For
centuries, it has been the cornerstone of their food and culture. During this period,
farming communities throughout the region developed, nurtured, and conserved over a
hundred thousand distinct varieties of rice to suit different tastes and needs.
Rice is a major food staple and a mainstay for the rural population and their food
security. It is mainly cultivated by small farmers in holdings of less than 1 ha. Rice is
also a “wage” commodity for workers in the cash crop or non-agricultural sectors. This
duality has given rise to conflicting policy objectives, with policy-makers intervening to
save farmers when prices drop, or to defend consumer purchasing power when there are
sudden price increases.
Rice is vital for the nutrition of much of the population in Asia, as well as in Latin
America and the Caribbean and in Africa; it is central to the food security of over half
the world population, not to mention to the culture of many communities. Rice is
therefore considered a “strategic” commodity in many countries and is, consequently,
subject to a wide range of government controls and interventions.

AGENCIES EXPORTING RICE


1. SHRIL: An ISO 9001-2000 Certified Company dealing in Indian long grain white
basmati rice, brown basmati rice.

2. SRI GAJANAN AGRO MILLS (INDIA) PVT. LTD, NIZAMABAD, ANDHRA


PRADESH: Since last 50 years in the processing of high quality premium grade
non basmati rice and broken rice.

3. TRISTAR OVERSEAS, New Delhi, Delhi: Exporter of variety of basmati rice


like traditional basmati rice, pure basmati rice, sharbati rice, shabnam basmati
rice, parmal basmati rice

4. USA RICE: USA Rice Federation is a national association representing producers,


millers and allied businesses advancing the use and consumption of U.S.

5. BASMATI ASSOCIATES, Navi Mumbai, Maharashtra: Basmati rice traders and


exporters and provides the premium brand of basmati from the company Jagat
Agro in Mumbai.

PRIMARY DATA
INFORMATION ON THE COMPANY
• The organization we visited is a rice export mill named Karari Rice Mill
Enterprises.

• It is situated in Nallasopara in Thane district of Maharashtra, India.

• Mr. Karari is the owner of the firm.

• They are rice, grain merchant and commission agent.

• Karari Rice Mill Enterprises deals in long grain white basmati rice, brown
Basmati rice and broken rice.

• Karari Rice Mill Enterprises,


Gass Road, Nallasopara (W),
Thane-401203, Maharashtra.

• www.indianriceexports.com

• www.agriculture-industry-
india.com
• http:/exportsproblems.com

• www.basmatirice.com

• www.lalqila.com

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