However, volatility has two sides of the same coin. While high prices lead to a particular set of difficulties, low prices come equipped with a specific set of challenges as well. While it is majorly understood that purchasing products at low prices is beneficial, it also creates difficulties for exporters. In the Indian Basmati rice export sector, this directly translates into recurring losses, the long-term impact of which is passed onto the grassroots stakeholders as well. In such scenarios, grassroots stakeholders like farmers have to go through difficulties, affecting their product viability.  As Basmati rice gradually becomes one of the most premium agricultural products globally, price dispersion directly translates towards increased competition, reduced orders, pricing instability, and supply chain disruptions.

Price Dispersion of Basmati Rice

Before discussing the price metrics of Basmati rice in detail, it is important to understand that market prices rely on numerous factors, many of which cannot be adjusted. Since Basmati rice is grown in India and Pakistan, exports prioritize ensuring quality and other strategic factors. For instance, if product quality is compromised by any means, it leads to a difficult situation for the exporters. Combined with the price volatility of commodities, Basmati exporters remain incapable of price adjustments owing to risks regarding losing market positioning. Additionally, when Indian exporters increase the prices of the country’s Basmati rice for the international market, buyers turn their attention towards neighboring Pakistan-based exporters — leading to an effect on Indian Exports. Whenever Basmati prices have increased in the international markets in recent years, Indian export houses have been impacted negatively by fewer orders, impacting their seasonal profitability.

While significant price increases hurt Basmati exports from India, partial price hikes have a more favorable outlook. Simultaneously, significant reductions in Basmati prices lead to setbacks for all stakeholders. While consumers can purchase it at reduced prices, grassroots stakeholders like farmers and mandi sellers are faced with difficulties, becoming unable to receive appropriate prices. 

General impact

The Basmati rice export ecosystem faces increased difficulties when price volatility occurs. International prices of Basmati rice closely influence purchase prices, which is why Basmati price surge or reductions directly affects both exporters and farmers. Similarly, price hikes negatively impact consumers, limiting their ability to purchase this premium agricultural product. As consumers limit their purchase of Basmati rice in the international markets, the lowered demand also impacts the supply chain, limiting exporters to book orders and farmers with reduced selling prices. The subsequent difficulty in the market creates a negative outlook, an aspect that has the potential to impact consecutive seasons.

These difficulties lead exporters to seek ideal conditions during the sourcing and export, since balanced prices help to enhance order bookings, ensuring fair trade. This scenario also supports the Indian economy significantly, helping to reduce trade deficits and helping earn foreign currencies. Furthermore, ideal conditions also help farmers to receive ideal prices, whereas consumers are empowered to purchase any amount of their liking. For instance, Indian Basmati exporters in FY 23-24 were able to trade 5.24 million tonnes of Basmati rice, a significant increase from 4.56 million tonnes in the previous year.

Future projection

While India produces the vast majority of Basmati rice in the world, it is looking to acquire a GI tag for the same in the coming years. Apart from the GI status, market price stabilization will be a catalyst for maintaining scalability and financial gains for stakeholders across levels. This will also directly translate into balanced prices, enhancing the ability of consumers to make purchases, and leading to the growth of the sector. However, ensuring quality and streamlined logistics will be key concerns, aspects that will drive sectoral growth of all stakeholders — exporters, consumers, and farmers.

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The newly launched Super Food is available in a pack of 1 kg and is packed in a collectible and reusable tin. Consumers can purchase it from leading E-Commerce platforms such as Amazon and Big Basket, as well as Modern Trade. The rice is available across Delhi, Haryana, Uttar Pradesh (U.P.), Maharashtra, Gujarat, Telangana, West Bengal, Andhra Pradesh, Karnataka, and Tamil Nadu.

Prior to this, the company had launched Daawat Quick Cooking Black Rice, which has been well-received by consumers. The rice is packaged in a 1 kg collectible and reusable tin and is available across E-Commerce platforms, modern trade, and general trade. It has a mild and nutty flavor that creates delicious recipes. It is rich in antioxidants, has a low glycemic index, and cooks in just 15 minutes.

Ritesh Arora, CEO, of India Business & Far East, LT Foods Ltd., said, “We, at LT Foods, are committed to providing healthy food options to the consumers. While solidifying our position further in the core Basmati and Specialty Rice segment, we diversified and forayed into the Convenience and Health segment more than a decade ago by launching Daawat Quick Cooking Brown Rice, which has maintained its leadership position to date. Building on it, the company launched Daawat Sehat, an iron and vitamin-fortified rice, which has also been well-received by consumers.“

K. Ganapathy Subramaniam, Head of Marketing, LT Foods Ltd., said, “To boost our health portfolio, we launched a Super Food range aimed towards consumers at large but to particularly appeal to the health-conscious consumers who are willing to expand their food repertoire for a better tomorrow. Our latest Super Food, Daawat Quick Cooking Red Rice, reflects our commitment to providing wholesome, nutritious food to enhance the well-being of our consumers. We believe that by introducing Red Rice, we are not only providing a healthy alternative but also opening up new avenues for culinary exploration. Its versatility in various cuisines and dishes makes it an exciting addition to any kitchen.“

Red Rice is known to be a rich source of iron and magnesium. It enables the consumers to live a better quality of life by mitigating the potential risks posed by lifestyle disorders such as cardiovascular and respiratory conditions, boosts digestion, and is good for bone health.

LT Foods has a consolidated revenue of around Rs. 6,979 crore as of FY23. It is growing at a 5-year Revenue CAGR of 15% and PAT CAGR of 35%. The company has an integrated “Farm to Fork” approach with a well-entrenched Distribution Network and Global Supply Chain Hubs backed by automated state-of-the-art and strategically located Processing Units in India, the U.S., and Europe, and a robust distribution network with 1300+ distributors across the globe.

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