For the second year in a row, basmati rice farmers in Madhya Pradesh will bear the brunt of falling prices of the product, once hailed as a prominent reason for making agriculture more remunerative.
The farm sector in MP has been under tremendous strain as other kharif crops namely soybean, urad and moong have also witnessed a drop in production.
At the commencement of the procurement season, basmati paddy is bought at Rs 1500 per quintal, down from the opening rate of Rs 2200 per quintal in 2014 and Rs 3600 per quintal in 2013.
Procurement companies blame international factors for the drop in prices. Interestingly, prices of basmati rice have not reduced at all in the last year even though prices of paddy, from which rice is removed, have crashed to almost a third of what they were in 2013.
“Prices of basmati, an export-oriented product, depend on international factors. Policies of other countries, too, play a role in determining price of basmati in India,” said Rajender Wadhwan, director, LT Foods.
Prices however may regain a bit after Diwali as procurement begins at earnest by big companies.
Procurement prices show a downward trend even though there has been a substantial reduction in the area of paddy cultivation in MP between 2014 and 2015.
As per agriculture department statistics, area under cultivation of paddy stood at 21.53 lakh hectares in 2014, which declined by 10.72% to 19.22 lakh hectares in 2015.
Of this, on an estimate, about 2 lakh hectares is under basmati cultivation. Basmati paddy production is estimated to be about 10 lakh tones, of which about 70% is exported.
MP is also locked in a legal battle with APEDA for securing GI tag for basmati from the state.
“The cost of inputs in basmati crop remains high which has reduced its profitability. There has not been any rainfall since August and the government failed to ensure availability of power for tube wells either. This would be the main factor in decline in production,” said Alamgir Saulat, a paddy cultivator in Raisen.