Indian basmati prices could remain firm this year as coronavirus has led to shortage of supplies in India. The main region growing high quality basmati rice is the north Indian region falling in the plains of the Ganges and Yamuna rivers. The reason for firming up prices is less of stock with the Indian government. The government buys majority of wheat and normal rice varieties in India and has set a minimum support price to help the famers in distress.
Due to coronavirus pandemic, Indian government provided extra food grains to Indian residents living in poverty this year. As per reports, majority of government grain storages in North India have very low grains stored at the moment as the distribution of grains on mass scale was carried out this season. Indian government has even procured fresh wheat crop from Punjab and Haryana amid coronavirus lockdown in order to send to other states.
Another major reason for firming up prices is the extra bonus on crops offered by Indian government this year. This will also continue for the paddy season. And, considering the higher price realization for normal rice varieties, farmers will be seeking higher price for premium basmati rice as well. The local consumption could remain high this year and Food Corporation of India would be more inclined to have more grains in storage, leading to additional buying from the open markets. The demand could also pick up due to higher storage in many importing countries amid COVID-19 pandemic.
While other food grains have witnessed stable prices, basmati rice in the upcoming season from India could cost more. The trends in commodity markets suggest that prices will remain firm for the rest of the year, till the time we see new crop arrivals in the Indian markets. In the meantime, basmati rice from Pakistan has remained almost stable, mainly due to drop in local currency against USD and Euro.