The Global Basmati Rice Market in 2024
The pathway to standardize rice exports from India is likely to be due to policy unpredictability and rigidity in local prices despite the trade limitations. In regards to the escalated domestic prices and exports, in 2023 the Indian government banned the export of non-basmati white rice, constrained 20% duty on parboiled rice exports and fixed a minimum export price of basmati at $950/mt.
Moreover, India inflicted curbs on rice exports that agitated the global market in 2023, pushing prices to multi-year highs, prices are likely to last at least till the first half of 2024, based on the latest market sources.
Updates on the Rice Export Restriction From India
The majority of trade sources claimed that they do not see the government relieving the restrictions before the general election that is supposed to happen between April-May 2024. In fact, the government might want to ensure a great rice harvest in the 2024 kharif season prior to lifting the export curbs.
The decrease in rice production during 2023-24 kharif season is possible because of dry weather conditions caused by El Nino weather phenomenon and a slow start to the rabi sowing have eliminated the improvement in supply conditions in the near term.
Besides, the US Department of Agriculture’s India attache has announced the country’s total rice production at 128 million mt in the MY 2023-24 (October-September) in comparison to 135.5 million mt last year.
Despite the trade curbs, local rice prices have stayed firm even during the harvesting season in 2023 which led to the government to publish a warning to retailers to reduce prices.
Increase In Global Demand for Basmati Rice
West Africa is one of the primary consumers of Indian white and parboiled rice. The area is price sensitive and normally high prices tend to decrease demand relatively unlike most major buyers in Southeast Asia where the buying power ability is considerably higher.
In 2023, most buyers in Africa imported massive volumes of rice, predicting export curbs in India. Although with the heavy restrictions already placed, that option is not available anymore for rice buyers.
As a result, purchasing in West Africa has already declined and if rice prices stay high, India’s non-basmati parboiled rice export is unlikely to reach the level seen in 2023. However, demand from Southeast Asia and a few Gulf countries are not going to be under the tight spot. But West African demand can surely stay restrained, if prices are over $500/mt FOB levels. Also, remember that directionally West African countries are processing/milling more rice themselves every year.
Stable Demand of Basmati Rice Globally
Meanwhile, nearly all trade sources denoted that basmati rice demand is most likely to be steady in the coming season. However, higher logistics costs and the presence of a minimum export price could be a hindrance.
Based on skilled exports, mostly basmati demand is not affected by moderate boost in prices. Though if the shipping disruption at the Red sea continues for an extended period, then that could push exporters to decrease prices. But most exporters believe that even if the Red sea issues persist, basmati export is likely to adapt to the new reality without a massive hit to the entire trade.
Out of the 22.3 million mt of rice exported from India in MY 2022-23 (April-March), 10.4 million mt was sent to west, east and north Africa. On the other hand, 4.4 million mt was shipped to the west Asian countries, which includes Gulf Cooperation Council countries.
Basmati Rice Market Segment Analysis - By Type
The basmati rice market according to the type can be further divided into parboiled and raw. The parboiled basmati rice type has been dominating the market share since 2021. It is known for a high nutritional value compared to white polished rice. Moreover, it has low calories, less carbohydrates, more fiber, proteins, amino acids and folic acid. It further enhances gut health and has less effect on blood sugar levels which directs the growth of the basmati rice market size.
Although raw basmati rice is approximated to grow with the quickest CAGR of 10.6% over the forecast period 2022-2027. This is because of its higher nutritional content compared to any other rice variety. Based on the latest expert research, eating whole grains like brown basmati rice is directly related to a lower risk of heart disease by reducing blood cholesterol levels and the risk of high blood pressure. Thus, it increases the demand for this basmati rice variety. It is also predicted to expand its basmati rice market share over the forecast period.
Basmati Rice Market Segment Analysis - By End-use
The basmati rice market according to the end-use can be further classified into household and industrial. Industrial usage has managed to dominate the market share since 2021. It is so because of the increasing demand for basmati rice in food & beverages, bakery and cosmetic industry and nutraceuticals.
Although, household use is evaluated to expand with the quickest CAGR of 11.0% over the forecast period 2022-2027. In fact, rice is a staple ingredient in most Asian cuisines. It offers an excellent source of proteins, carbohydrates, folic acid and amino acids.
As Asia makes up to 60% of the global population, the demand for basmati rice continues to grow across the globe. Such boosting demand for basmati rice ignites the growth of the basmati rice market share as well.
All in all, the steady demand for basmati rice might experience a few complications because of higher logistics costs and the minimum export price. On the positive side, India’s rice stocks in the Food Corporation of India’s central pool at about 56 million mt till December 1. Although there are concerns about sustained restrictions, the stock levels are way beyond the government’s buffer stock norm, giving hope for a possible relaxation of rice export curbs. India is one of the largest exporters of rice globally, with such massive stock in its reserves, eventually, the government needs to ease the restrictions as it’s not sustainable. In fact, most exports are highly optimistic that a swift start to retention this season will ultimately boost paddy availability for exports.