Rice- a global staple: Basmati is like wine, it only gets better withe age.

The origin of rice is buried in obscurity and the depths of time but this one single variety of grain has fed and nourished more people over a longer period of time than any other crop. Rice or Oryza Sativa (as botanists prefer to call it) is not a tropical plant but is still associated with a wet, humid climate. It is generally believed that the domestication of rice began somewhere in the Asian arc. More than 90 percent of rice is produced and consumed in Asia. Grown only in Himalayan Region of India and nurtured by snow fed rivers, Basmati is without a shadow of doubt the King of all rice in the world. Its long slender shape and an unmatched fragrance and aroma are reflective of the age old civilization that cultivates it.

Rice – A Global Staple

India is not only known for its production, but it is also one of the biggest consumers of rice in the world. Rice farming is the largest single user of land for producing food. Ninety percent of all rice produced in the world is produced in Asia and it is one of the most important economic activities on Earth. Thousands of varieties of rice are farmed but only 7 percent of all rice production is exported from its country of origin. Rice eaters and growers form the bulk of the world’s poor and is the single most important source of employment and income for rural people.

Four major types of rice are produced worldwide:

  • Indica is grown mostly in tropical and subtropical regions and accounts for more than 75 percent of global trade. Indica rice cooks dry, with separate grains.
  • Japonica rice, typically grown in regions with cooler climates, accounts for about 8 percent of global rice trade.
  • Aromatic rice, primarily jasmine from Thailand and basmati from India and Pakistan, accounts for around 15 percent of global trade and typically sells at a premium in world markets
  • Glutinous rice, grown mostly in Southeast Asia and used in desserts and ceremonial dishes, and several other specialty rices account for most of the remainder.

Some of the many benefits of rice are: High in Fiber, Selenium, Energy, Cholesterol free, healthy for heart, good for losing weight, prevents cancer and stabilizes blood pressure.

An Overview of Indian Rice Business

Basmati rice is like wine, it only gets better with age.

India’s rice industry has seen a transformation in the last decade, with growth of branded business in the domestic market and a strong impetus to export. Currently around 10 percent of the country’s rice production is exported, accounting for about 25 percent of total global rice trade. Exports have played a major part in growth of Indian players in the past.

Strong growth prospects of branded rice

Over the last four years, the industry has shown strong revenue growth, with an increasing focus on branded business. However India’s rice production has remained stagnant over the last few years, while domestic consumption continues to increase. Changing consumer behavior and an emerging modern food retail channel will support growth in the coming years. There are possibilities of considerable growth prospects in the domestic branded market in the future. The branded rice business will be growth driver in the future, and rice players will have to introduce supply chain changes and create strengths in branding and value addition. This will become critical, considering that exports will not be a sustainable long-term growth strategy. Indian consumption story would test our logistic capabilities in coming years. An integrated value chain focused on quality will be critical in order to sustain momentum, and capabilities in procurement, distribution and branding will need to be developed in order to achieve the next level of growth.

Current rice industry scenario

Ongoing paddy price in northern parts of India is in the range of 2200-2250 per quintal but offtake is slow owing to a subdued international demand. In the northern hemisphere, various countries after harvesting their main crops are now ready to sow offseason crops. World paddy production forecast has been raised by 2.9 million tonnes in 2016 by FAO. This upward revision comes in the wake of improved crop prospects in Asia where weather conditions have enabled cropping activities to unfold considerably better than in the past two seasons. India is in sweet spot among many countries in Asia although the outlook has also improved for Brazil, Cambodia, Colombia, the Islamic Republic of Iran, Nigeria and Thailand. But the prospects deteriorated in China (Mainland), the United States and Vietnam.

Indian Rice Exports forecast

Indian Rice Exports forecast
Indian Rice Exports forecast

But things look to improve for India moving forward with new demand arising out of Iran which has wriggled out of an import ban. Support from government would definitely help by penning new agreements with United Kingdom after Brexit and exploring newer markets. As for India, the estimated demand of rice by 2020 would be around 114 million tonnes from the current level of 105 million tonnes at modest growth rate of 1.6 percent annually. This would enable the country to export approximately 6 million tonnes of non-basmati and 4 million tonnes of basmati. There is a huge potential in India to raise rice production owing to the sizeable under exploited irrigation deficit ecologies and replacing conventional low yielding methods with new technologies like adoption of new generation rice hybrids and submergence tolerant rainfed lowland varieties.

Currency demonetization – Financial Surgical Strike

pm-of-india-narender-modiThe radical and path breaking steps taken by the Indian Government has been long lasting impact on the country as a whole and more particularly on the long term economy. The Currency demonetization is the most impact-full, bold and will-full decision taken by any government in India or in the World.

This Financial surgical strike not only has hit straight on the black money but also annihilated the fake currency in one go that shall break the linkages of terrorism and smuggling. It does not only resolve two chronicle issues at once but also boost the cash flow significantly. The increased cash in the system should enable better business volumes, thus resulting in higher revenues to the government in form of direct and indirect taxes. This in turn will ensure higher government spending in infrastructure etc. As a result of all this, the Gross domestic product (GDP) will increase at a higher rate.

The Rice industry shall also be impacted. In short run it may suffer on cash deals, but in the longer run it shall stream line the life of all stake holders including millers, farmers and commission agents. Demand for packaged or branded rice. Improved affordability amongst consumers shall lead to price stability in Rice which will bring overall stabilising effect in the rice milling industry. It shall also encourage the rice milling industry to adopt structured and professional approach.