Floodhit Pakistan, India face rising Basmati prices

MUMBAI/KARACHI:

Heavy rains and widespread flooding in basmati rice-growing regions of Pakistan and India have raised concerns over output of the premium staple, driving prices higher as supplies are expected to fall.

Pakistan and India exclusively grow aromatic basmati rice, which sells for nearly twice the price of regular varieties and is primarily imported by Britain, the Middle East, and the United States. Pakistan's Punjab province accounts for more than 90% of the country's total basmati rice production, while India's northern states of Punjab and Haryana contribute over 80% of its output.

Heavy rainfall in late August and earlier this month caused the Ravi, Chenab, Sutlej, and Beas rivers to overflow, flooding these regions.

Initial assessments indicate that crops such as paddy, cotton, and pulses on nearly one million hectares were affected in Punjab and Haryana, said an Indian government official.

The floods have hit farmers hard, just as crops such as basmati rice and cotton were nearing harvest, said Ibrahim Shafiq, Export Manager at Latif Rice Mills Pvt Ltd. In India and Pakistan, paddy seedlings are usually transplanted in June–July, with harvesting starting in late September.

The industry was expecting a bumper crop, but the damage is likely to reduce supplies and push basmati rice prices higher, Shafiq said.

"Conservative estimates put the damage at 20% of basmati rice grown in Pakistan...This would definitely drive up the price for basmati rice in local markets as well as international markets," Shafiq said.

Traders have raised prices by $50 per tonne over the past week.