A SYB.M.S PROJECT ON

Submitted to Prof. Jalpa Parekh of BMS Department

Group members:

Danish Choudhari (39)Jaffer Choudhari (40)Khatija Daudi (05)Mayuri Joshi (07)

We are greatly honoured and privileged to thank and acknowledge those people who have contributed directly or indirectly in making this project successfully.

Firstly with gratitude, we would thank Our Principal Sir, Prof. A.E. Lakdawala for giving us the opportunity for making this project and extracting good knowledge from this project. We also thank Our Joint-Principal, Prof. Kamala A.; Vice-Principal Prof. Mallika and Our BMS Co-ordinator, Prof. Renu K. in this context. With immense gratitude, we would like to thank Our Subject Co-ordinator, Prof. Jalpa Parekh, for guiding us throughout the project.

We would also thank all the sources from whom we have collected the primary data and lastly our group members who have been supportive and co-operative throughout.

SR. NO.

CONTENTS PG.NO.

1. Introduction 12. Origin and history of Rice in India 23. Production of Rice in India 24. Classification of Rice 35. Branding of rice 56. Factors influencing prices of rice 67. Problems of Rice exports from

India7

8. Suggestions for sustaining Rice exports

8

9. Prospects of Rice exports from India

9

10. Incentives to Rice exporters of India

10

11. Restrictions on Exports 1112. Statistics & Calculations of Rice

Exports from India12

13. Case Study 1514. Conclusion 1715. Agencies exporting rice 18

16. Primary data:i. Information on Karari Rice

Millsii. Questionnaires

18

17. Bibliography 19

INTRODUCTION

Worldwide, India stands first in rice area and second in rice production, after China. It contributes 21.5 percent of global rice production. Within the country, rice occupies one-quarter of the total cropped area, contributes about 40 to 43 percent of total food grain production and continues to play a vital role in the national food and livelihood security system. However, India did not become a major rice exporting country for a long time. Its share in world rice trade, mainly in the form of small-volume exports of highly prized basmati rice, was insignificant (5 percent). It was not until the mid-1980s that the quantum of export started to grow, from 110000 tonnes in 1978-79 to 890613 tonnes in 1994-95 and to a record 5.5 million tonnes in 1995-96, second only to Thailand (at 5.9 million tonnes).

Rice is one of the important cereal food crops of India. Rice contributes about 43% of total food grain production and 46% of total cereal production in the country. It continues to play vital role in the national exports. The percentage share of rice in total national export was 4.5% during 2005-06. The percentage share of agriculture export in total national export was 18.25%, whereas the percentage share of rice export in total agriculture export was 24.62% during 2005-06. Thus, rice export contributes nearly 35% of total agriculture export from the country.

Among the exporting countries, Thailand, Vietnam, India and Pakistan are the major countries exporting rice in sizeable quantity. India is one of the richest countries in the world in terms of possessing tremendous diversity in rice varieties. There are different varieties of rice-depending on the weather, soil, structure, characteristics and purposes.

Rice is grown under a damp warm climate. A temperature range of 20ºC to 37.7º C (68º F to 100º F) is required for the optimum growth of rice. Rice being a semi-aquatic crop grows best under submerged, waterlogged conditions. Rice is able to tolerate a wide range of soil reactions, but has a preference of acidic soils. Rice cultivation is found in all the states of India, but West Bengal, Uttar Pradesh, Madhya Pradesh, Punjab, Orissa and Bihar are the major rice producing states. About 600 improved varieties of Indica rice have been released for cultivation since 1965.

ORIGIN AND HISTORY OF RICE IN INDIA

India is an important center of rice cultivation. The rice harvesting area in India is the world's largest. The two major rice varieties grown worldwide today are Oryza sativa indica and Oryza sativa japonica. According to research studies, they owe their origins to two independent events of domestication thousands of years ago.

Historians believe that while the indica variety of rice was first domesticated in the area covering the foothills of the Eastern Himalayas (i.e. north-eastern India), stretching through Burma, Thailand, Laos, Vietnam and Southern China, the japonica variety was domesticated from wild rice in southern China which was introduced to India before the time of the Greeks.

The earliest remains of cultivated rice in the sub-continent have been found in the north and west and date from around 2000 BC. Perennial wild rices still grow in Assam and Nepal. It seems to have appeared around 1400 BC in southern India after its domestication in the northern plains. It then spread to all the fertile alluvial plains watered by rivers. Cultivation and cooking methods are thought to have spread to the west rapidly and by medieval times, southern Europe saw the introduction of rice as a hearty grain. Some says that the word rice is derived from the Tamil word ‘Arisi’.

Rice is first mentioned in the Yajur Veda (c. 1500-800 BC) and then is frequently referred to in Sanskrit texts. In India there is a saying that grains of rice should be like two brothers, close but not stuck together. Rice is often directly associated with prosperity and fertility; hence there is the custom of throwing rice at newlyweds. In India, rice is always the first food offered to the babies when they start eating solids or to husband by his new bride, to ensure they will have children.

PRODUCTION OF RICE IN INDIA

From a nation dependent on food imports to feed its population, India today is self-sufficient in grain production and also has a substantial reserve. The progress made by agriculture in the last four decades has been one of the biggest success stories of liberal India. Agriculture and allied activities constitute the single largest contributor to the Gross Domestic Product, almost 33% of it. Agriculture is the means of livelihood of about two-thirds of the work force in the country.

The demand for rice in India is projected at 128 million tonnes for the year 2012 and will require a production level of 3,000 kg/hectare significantly greater than the present average yield of 1,930 kg/hectare. Government of India is targeting to achieve production of 129 million tonnes of rice by 2011-12 with the growth rate of 3.7% along with other food grains. The production of rice in India has shown an increasing trend which is evident from the Table given below:

PRODUCTION CONSUMPTION

YEARPRODUCTION(in mn tonnes)

YEARRICE (in grams)

2000-01 53.63 2000 220.02001-02 74.29 2001 204.92002-03 82.54 2002 215.02003-04 86.08 2003 201.82004-05 89.68 2004 205.42005-06 84.98 2005 206.42007-08 93.08 2006 208.1

Source: Federal ministry of Agriculture, Govt. of India

CLASSIFICATION OF RICEIndia is one of the important countries in the world in export of rice. India's

exports are expected to go up further during current financial year. Hence, Indian rice exports are set to reach second place in the world markets after Thailand edging out Vietnam in the process as per the report of the Food and Agricultural Organisation. Indian rice is classified into three types:

A. BASMATI RICE

Rice export from India constitutes the major share of Basmati rice. Nearly two-third of Basmati rice produced in India is exported. Basmati rice is the leading aromatic fine quality rice of the world trade and it fetches good export price in the international markets. In fact, Basmati rice is a gift from "Mother Nature" to the Indian sub-continent and grows in the Indo-Gangatic plains only.

The meaning of Basmati can be derived from "bas" which means aroma and "mati" meaning sense. Thus the word Basmati implies 'ingrained aroma'. So it is the aroma that gives basmati its novel characteristics unmatched by any other rice grain anywhere else in the world. Many scented varieties of rice have been cultivated in the Indian sub- continent from time immemorial but basmati distinguishes itself from all other aromatic rice due to its unique aromatic characteristics coupled with silky texture of its long grain. Now, it is still considered "dream of the masses" and "charm of the classes".

Golden parboiled Raw Basmati Silky raw basmatirice

Gulf region remains the major markets for Indian basmati rice and inside Gulf, Saudi Arabia accounts for the major chunk of basmati imports from India. Pakistan is the sole competitor for India in the international market for basmati rice. During 2005-06, 2006-07 and 2007-08, total quantities of basmati rice exports from India were 5.98 lakh million tonnes, 6.38 lakh million tonnes and 8.52 lakh million tonnes in which the percentage share of Asia was 85.69%, 82.12% and 73.38% respectively.

The export to North America has also increased in the same order from 1.39% during 1998-99 to 5.28% during 2000-01. However the export to other countries remains constant with slight fluctuation from year to year. India's major markets for basmati rice exports have been Saudi Arabia, Australia, Austria, Belgium, Bahrain, France, Germany, U.K., Denmark, U.S.A., Canada, Belgium, Kuwait, Italy, Oman, Yemen, Netherlands, Jordan, Indonesia, etc. In fact, Saudi Arabia traditionally has been the largest market for Indian basmati rice.

B.   NON-BASMATI RICE

Major destinations for India's non-basmati rice exports are Bangladesh, Australia, Bahrain, Ethiopia, Djibouti, France, Germany, U.K., Hong Kong, Korea, Sri-Lanka, Maldives, Mauritius, Malaysia, Nigeria, Ivory coast, Indonesia, Nepal, Oman, Qatar, Russia, South Africa, Saudi Arabia, Somalia, Singapore, U.A.E. Y.A.R., etc. Competing countries in the international markets for India for the exports of

non-basmati rice are Thailand, Vietnam, Burma, China, U.S.A. and Pakistan. Major quantity of non-basmati rice is exported to Asia continent.

During 2004-05, 2005-06, 2006-07 and 2007-08, a total quantity of 9.59 lakh million tonnes, 9.28 lakh million tonnes, 28.75 lakh million tonnes and 7.08 lakh million tonnes were exported to Asia continent which were 48.20%, 51.66%, 65.86% and 56.28% of total export of non-basmati rice from India to Asia, respectively.

After Asia, non-basmati rice is exported from India to Africa continent. During 2004-05, 2005-06, 2006-07 and 2007-08, a total quantity of non-basmati rice exports from India to Africa were 5.39 lakh million tonnes, 5.59 lakh million tonnes, 10.67 lakh million tonnes and 3.24 lakh million tonnes, in which the percentage share of Africa continent was 27.09%, 31.14%, 24.44% and 25.73% respectively of total export of non-basmati rice from India.

Next to Africa continent, Europe continent has been importing non-basmati rice from India during 2004-05, 2005-06, 2006-07 and 2007-08. The exports of non-basmati rice from India to other continents are very meager. The exports to Europe continent during the last few years were an average more than 1.5 lakh million tonnes per year

C.  PARBOILED RICE

Indian is exporting parboiled rice to Middle East and African countries, as these countries prefer parboiled rice.

BRANDING OF RICE

It's sign of the changing times. The imprint of a brand is getting bolder, even in a down-to-earth commodity market like rice. Along with increasing consumer awareness and changing preferences, the rice industry is witnessing change. No more is the friendly neighbourhood grocer's word all there is to go by. In a country that produces thousands of varieties of rice, branding has come to play a role in domestic as well as export markets. The brand is the new mantra for success and basmati, also known as the 'king of rice', is in the midst of the action.

LAL QILLA TOPS THE LISTIndia accounts for about 70 percent of the world's basmati production of 1.25

million metric tonnes. Of this, nearly 3.5 lakh metric tonnes is consumed in India and the rest is exported. The industry is growing rapidly the world over with basmati becoming increasingly popular. Of the total domestic basmati consumption of 3.5 lakh metric tonnes, branded basmati accounts for about 1.25 lakh metric tonnes and has been growing at the rate of 20 per cent a year. The Indian branded basmati market is estimated to be worth between Rs. 600-700 crore. Rice producers have picked up the market trend towards preference for branded basmati and have jumped on to the bandwagon so that there are more than 100 regional brands of rice in India. The

trendsetter has been Amar Singh Chawalwala of Amritsar, whose Lal Quila brand is acknowledged as the best selling rice brand in India, notching up sales of Rs 100 crore a year.

BASMATI RICE BRANDS OF INDIA

In a tough and a competitive international market of rice, it has become very much necessary to give a brand name to even a food grain, rice. With the increase in consumer awareness and shift in the position of customer from a mere buyer to the “King Of the Market”, it has become utmost essential to give a name to the essential food crop of India to survive in the international market. The brand is the new mantra for success and basmati, also known as the 'king of rice', is in the midst of the action.

Of the total domestic basmati consumption of 3.5 lakh metric tonnes, branded basmati accounts for about 1.25 lakh metric tonnes and has been growing at the rate of 20 percent a year. The Indian branded basmati market is estimated to be worth between Rs. 600-700 crore. Rice producers have picked up the market trend towards preference for branded basmati and have jumped on to the bandwagon so that there are more than 100 regional brands of rice in India. Some famous brands available in India, USA, Canada, U.K., Norway, Denmark, Holland, Sweden, Australia, Kuwait, Saudi Arabia, UAE and many other countries are as follows : Lal Qilla Double Diamond Brand Basmati Rice Resham brand Tilda Basmati rice Pari Basmati Rice Adora Basmati Dawat Basmati Kohinoor Basmati Blue Label Basmati Lal Haveli Basmati

FACTORS INFLUENCING THE PRICE OF RICE

1. Weather: Role of weather in rice production is immense. Temperature, rainfall and soil moisture are the important parameters that determine the crop condition. Further, natural calamities can also affect crops. Markets keep watch of these developments.

2. Minimum Support Price: Changes in the minimum support prices (MSP) by the government also have immense impact on the price of rice.

3. Substitute Product: Availability of substitute products at cheaper rate may lead to weakness in demand. This situation happens especially when the main products price tends to become higher.

4. Consumption: Rice consumption depends on two factors - population and income. For example, rice is the staple food of Asia. Low-income groups consume more rice according to the per capita income increase. But as the income increases, there arrives a point when the consumption starts to dip. Income growth and reduction in population result in a low consumption of rice.

5. Seasonal cycles: Seasonal cycles are present in rice cultivation. Price tends to be lower as harvesting progresses and produce starts coming into the market. At the time of sowing and before harvesting price tends to rise in view of tight supply situation.

6. Demand: Import demands as well as domestic demand influences the price of rice in domestic as well as international market.

7. New technology: Breakthrough in the technology may increase the productivity and would lead to more supply. This may bring some softness in the price.

PROBLEMS OF RICE EXPORT FROM INDIA

India is facing stiff competition in the world markets for export of rice. Besides, there are many domestic problems for rice exporters. If these internal problems are relaxed to the extent possible, the exporters may find easy way to boost rice export and such measures will go a long way to sustain the exports. Some of the major problems are:

1. High tax rate: Indian rice is costlier in the international market as compared to other competing countries in the world because of imposing of various taxes on rice exports. These taxes include- Purchase Tax (on indirect export), Market Fees, Rural Development Fund, Administrative Charges, etc. as per the state Government policy. In Pakistan, rice meant for exports specially the branded ones, duties are extremely low or duty free.

2. Minimum Support Price: The Minimum Support Price (MSP) for paddy is

enhanced every year by the Government of India. Due to MSP, farmers are free to sell in the open market or to the Government at the MSP depending on what is more advantageous to them.

3. High production cost: The production cost goes up due to increase in the cost of inputs used for paddy cultivation. That is why when paddy is converted to rice, it becomes costlier making it internationally uncompetitive.

4. High competition in international markets: Rice production meant for export purpose is having subsidy in other countries like Thailand, Vietnam and Pakistan, which reduces the cost of production and thereby reducing the cost of rice. Therefore, the export price of rice of such countries is more competitive in the international markets compared to Indian rice.

5. Inelastic prices: Indian rice prices are inelastic due to relatively high cost of production whereas the major rice producing nations have decreased the price to capture the international markets.

6. Lack of proper infrastructural facilities: Rice mills have not been fully modernized to ensure high milling recovery and reduce the percentage of broken rice. Apart from this, there is lack of proper arrangements for production of sufficient quantity of quality seeds needed for cultivation of rice for export purposes.

7. Quality problems of Basmati rice: Indian Basmati rice is facing aroma problem, because intensity of aroma in traditional basmati varieties is not as high as it used to be. Post harvest handling of produce is another important aspect. Generally, farmers are harvesting the crop at different moisture levels and keeping the produce at higher moisture level for a longer period will impair the intensity of aroma. In absence of genetically pure seed of basmati varieties, a variation in plant height, grain size and maturity of the crop is found. This is one of the major reasons for poor quality of basmati rice.

SUGGESTIONS FOR SUSTAINING RICE EXPORT

Rice export constitutes a considerable share in the national exports. Keeping in view the importance of rice in the national export items, concerted efforts are required to be made to further promote the export of rice. There is a good scope for India to take advantage of the new trade opportunities for promoting the export of rice. This can be achieved if production is made as per the requirements of international markets by increased investment in Research and Development coupled with export friendly trade policies. The following are few of the measures suggested to sustain the export of rice in future:

1. Breeding programme may be initiated to develop high yielding export quality rice (Basmati, Non-Basmati, Long Grain Rice, etc.) to enable the exporters to sustain their export in future.

2. Survey may be conducted to identify export quality belts/zones for production of rice to meet the requirement of exports.

3. Extension activities may be strengthened to educate the cultivators for production of quality rice to match the standards of international markets.

4. Low cost production technology may be developed to bring down the cost of production to enable the exporters to compete with competing countries in the international markets.

5. Proper arrangements may be made for procurement and processing of rice export purpose as per the requirement of international markets.

6. Proper arrangements may be made for production of pure quality seeds and making them available to the farmers at subsidized rates.

7. In case of basmati varieties, crop should not be allowed to lodge and there should be proper water management in the field. If these are not attended properly, such situation may affect both aroma and linear kernel elongation.

8. Post harvest operation is also very important. After harvesting, if produce is allowed to remain at higher moisture level for a longer period, it will impair the intensity of aroma.

PROSPECTS OF RICE EXPORT FROM INDIAIndia is facing stiff competition in the International markets from Thailand,

Vietnam, U.S.A. and Pakistan. There was a considerable growth in the export of rice from India during the recent past, particularly in the case of non-basmati rice. There are several factors responsible for this growth. In fact exports depend not only on our ability to sell, but also on the willingness of importers to buy. Sometimes major markets/importers used to cut down their import due to their internal economic problems or good crop harvest and trade also cut down inventories and people reduce spending. All these measures reduce imports during that particular year. The prospects of export of basmati and non-basmati rice from India are discussed herewith:

 BASMATI RICE

Awareness about basmati rice is spreading among different strata of the society in the country and abroad. Basmati rice is possessing unique grain, cooking, eating and digestive qualities. Hence, majority of people in the country and abroad have developed liking for basmati rice. Because of its superfine quality, basmati rice is most preferred and also meant for high premium value in the national and international markets. Thus, basmati rice is also stated to be 'Pearl' of rice.

Commercially, Taraori Basmati, Basmati-370 and Basmati Type-3 are very popular. All these three varieties are similar in starch characteristics but based on grain dimensions Taraori Basmati is preferred much over Basamati-370. Similarly Basamati-370 is preferred more over Basmati Type-3. Pusa Basmati-1 has been well accepted by the trade and there are good prospects for export. In fact, Pusa Basmati-1 is at present most profitable variety in rice, in spite of being highly susceptible to major insects, pests and diseases. Under proper crop management condition farmers can get 4-6 tonnes paddy yield per hectare. This variety is much favoured by the farmers, traders and consumers.

With the every coming year, domestic as well as international demand for basmati rice is increasing. If desired aroma in basmati rice along with other quality characteristics is maintained, these measures may help to boost the export of basmati rice from India.

 NON-BASMATI RICE

Non-basmati rice exports have also suffered much due to the competition from exporting countries like Thailand, Vietnam and Pakistan because of their low cost of production. In the recent past export of non-basmati rice was fluctuating year after year

due to various reasons. If rice exporters made their sincere efforts with Govt. supporting export policy, non-basmati rice export is expected to increase in future.

INCENTIVES TO RICE EXPORTERS OF INDIA

Various incentives are given to the exporters of rice, since Rice is most important cereal crop of India. Also to make Indian Rice competitive in the international markets, Government of India keeps on coming with new export friendly policies as well as incentives for the rice exporters.

The decision of the Union Government to allow non-basmati rice exports to 21 African countries to the extent of one million tonnes is a welcome move, as it will help the millers and the farmers, but clear guidelines have to be formulated and tenders should be called for to ensure transparency, according to Vinod Agarwal, President of AP Rice Exporters’ Association.

He said in an interview here on Tuesday that the Directorate-General of Foreign Trade had issued a notification earlier this month allowing rice exports to 21 African countries. Three Government agencies - MMTC, STC and PEC - had been appointed to facilitate exports to these.

“But our past experience shows that there is no transparency in such transactions. Three or four major exporters manage to corner the contract and the others are denied the benefit. It is of no benefit to the millers or farmers and only the three or four big players stand to gain. Therefore, we want transparency in the transactions. Tenders should be floated and all should be given a fair chance," said Agarwal.

He said that after imposition of ban on rice exports in 2007 some five lakh tonnes of rice was allowed to be exported to Bangladesh in government-to-government deals but "only three or four major exporters grabbed the contracts."

He said the current situation in Andhra Pradesh market was causing concern, as the FCI was not buying rice from the millers and the latter were therefore not willing to buy paddy from the farmers. "The FCI is not in the market and exports are not allowed. There is severe scarcity of storage space, as wheat from the North is dumped in the godowns here. Therefore, there is a lull and crisis in the market.

EXPORT SUBSIDIES

Export subsidy reduction commitments have been made under the Uruguay Round Agreement on Agriculture (URAA) by Colombia, Indonesia, Uruguay, the EC and the United States. The actual use of export subsidies has fallen short of the aggregate ceiling, although information is difficult to get even from the WTO. Proposals for further reduction commitments are likely to meet opposition from the EC. Other issues have arisen in relation to export competition in rice, in particular the granting of export credits by the United States of America. It should be noted, however, that export

credits are also commonly used in government-to-government deals, although there is little information available in connection with such practices.

Export subsidies have been used by India since mid-2001 to promote exports of rice held by the government Food Corporation of India. According to the WTO, India is not eligible to use export subsidies on rice, but the country claims that under the URAA (Article 9-4) the country is exempt from commitments on export subsidies for marketing, processing and transportation. While this position is questionable, the country has to date not been challenged on that account by other countries in the WTO.

RESTRICTIONS ON EXPORTS

The Commerce Ministry’s decision permitting export of up to 10 lakh tonnes (lt) of rice to African countries through parastatals is subject to the shipments containing a minimum 25 per cent brokens content.

“The rice to be exported shall be with a minimum of 25 per cent of brokens”, the Directorate General of Foreign Trade’s (DGFT) notification, dated May 6, has said. “On the other hand, you have a condition of a minimum export price (MEP) of $1,100 a tonne below which no basmati rice can be shipped out. And now, the same Commerce Ministry is saying that you can export non-basmati rice only if it has a minimum 25 per cent brokens, which corresponds to the most commonly consumed grades here”, said Mr. Vijay Sethia, former President of the All-India Rice Exporters’ Association (AIREA).

According to him, if the Government was keen to gradually ease restrictions on rice exports, the best way would have been to lower the MEP and make it applicable to both basmati as well as non-basmati grain. “By this, you will ensure that only high-end rice, which includes premium non-basmati varieties such as Ponni, Swarna Masuri and Red Matta, is exported, while the rice consumed by ordinary segments remains within the country”, he added.

The 10 lt of rice permitted to be exported has been allocated among 21 countries. This includes 1,44,900 tonnes to Cote D’Ivorie, 1,41,300 tonnes to Senegal, 1,17,100 tonnes to Nigeria, 96,000 tonnes to Liberia, 72,400 tonnes to Togo, 68,800 tonnes to Ghana, 48,300 tonnes to Egypt, 38,500 tonnes to Sierra Leone, 36,250 tonnes to Gambia, 24,200 tonnes each to Burkina Faso, Mali, Somalia, Benin, Guinea Bissau, Mozambique and Zambia, 21,700 tonnes to Cameroon, 15,000 tonnes to Mauritius, 12,100 tonnes each to Djibouti and Zanzibar, and 5,550 to Tunisia.

STATISTICS AND CALCULATION OF RICE EXPORTS FROM INDIA

AVERAGE EXPORT PRICE AND ITS CALCULATION

Total quantity of rice exported and its value realized in rupees have been taken separately for basmati and non-basmati rice and then the value of export divided by the quantity of rice exported to arrive at the average export price of rice per quintal year wise for basmati & non-basmati.

We give below a year wise representation of average export price of basmati rice and non-basmati rice in India:

YearBasmati Rice

Rs. Per Quintal Non-basmati RiceRs. Per Quintal

2000-01 1,957.00 759.002001-02 2,279.00 819.002002-03 2,385.00 968.00 2003-04 2,841.00 939.00 2004-05 3,140.00 1,009.00 2005-06 2,789.00 1,070.00 2006-07 2,543.00 1,139.00 2007-08 2,762.00 864.00

It is seen from the above table that export price of basmati and non- basmati rice has fluctuated significantly year after year. The reason for fluctuation in average export price of rice is attributed to different quantity and quality of rice exported to different countries during different years. A particular country may import a particular quality/grade of rice in one year and the same country may import another quality/grade of rice during next or subsequent years. Thus, different quality and quantity of rice exported to different countries at different export price rate may probably be the reason for fluctuation of average export price of rice in India.

EXPORT EARNINGS FROM RICE

The export earnings from the export of total rice (Basmati and other than Basmati) during 1998-99 accounted for 4.38% of total national export earnings. The total earnings from Basmati Rice during 2005-06 were 1.33% of total national export earnings. Similarly, export earnings from agricultural exports during 2005-06 were 17.81% of total national export earnings. The percentage share of rice exports to the total agricultural exports during was 24.58% in which the share of Basmati Rice was 7.5%. This is more clearly shown in the following table which shows the export earnings of the country:

Item Year 2005-06Total National Exports 1,41,603.53 Rs. croresTotal Agricultural Exports 25,224.63 Rs. crores

Total Exports of Rice 6,200.80 Rs. croresTotal Exports of Basmati Rice 1,886.25 Rs. croresPercentage share of Basmati to the Total Rice Exports 32.42% Percentage share of Rice Exports to Total Agricultural Exports

24.58 %

EXPORT OF BASMATI RICE FROM INDIA

Basmati Rice, the leading aromatic fine quality rice in world trade, fetches good export price in international market for its three distinct quality feature: pleasant aroma, super fine grains and extreme grain elongation. Nearly two third of Basmati Rice produced in India is exported. India accounts for about 70 percent of the world's basmati production. Each year, India produces nearly 2.25 lakh tonnes of rice. Almost 1.25 lakh tonne is consumed by India’s residents. The rest is left for exports. The countries were Basmati rice is exported include Saudi Arabia, UAE, European Union countries, USA, UK, Germany, Australia, Austria, Russia, Singapore, Iran, Kuwait, Behrain, Spain, Italy, France, Denmark and Norway.

According to a latest report by APEDA, till February 2006, basmati export had already crossed one million tonne mark and stood at 11.4 lakh tonne, which has been valued at Rs 2,775 crore.

Year wise Export of Basmati Rice

  Export of Basmati riceYear Quantity ('000 tonnes) Value (Rs. in Crores)

2002-03 593.32 1,685.622003-04 600.60 1,866.25 2004-05 ** 2142.00 2005-06 710.29 **2006-07 1140.00 2775.00

EXPORT OF NON-BASMATI RICE FROM INDIA

India is also exporting a substantial quantity of non-basmati rice to various countries in the world. However, the export of non-basmati rice has been fluctuating year to year due to weather conditions affecting the production of non-basmati rice. The export of non-basmati rice from India was on its peak during 2004-05 and a total quantity of 45.41 lakh metric tons was exported to different countries in the world. Again the export crossed to 43.66 lakh metric tons during 2006-07, but during subsequent years, the export of non-basmati rice again came down significantly due to

various reasons. The countries where Non-Basmati Rice is exported include Saudi Arabia, Bangladesh, Australia, Bahrain, Ethiopia, Hong Kong, Korea, Sri-Lanka, Maldives, Mauritius, U.A.E., Malaysia, Qatar, Nepal, Indonesia, Somalia, Singapore, etc.

Year wise Export of Non-Basmati Rice from India

Export of Non-Basmati Rice Years Quantity ('000 tonnes) Value (Rs. in Crores)

2003-04 565.19 225.462004-05 448.50 340.472005-06 4,540.70 3,717.412006-07 1,989.04 1,924.722007-08 1,795.74 1,685.37

CASE STUDY

In late 1997, an American company RiceTec Inc. was granted a patent by the US patent office to call the aromatic rice grown outside India 'Basmati'. RiceTec Inc. had been trying to enter the international Basmati market with brands like 'Kasmati' and 'Texmati' described as Basmati-type rice with minimal success. However, with the Basmati patent rights, RiceTec would be able to not only call its aromatic rice Basmati within the US, but also label it Basmati for its exports. This has grave repercussions for India and Pakistan because not only will India lose out on the 45,000 tonne US import market, which forms 10 percent of the total Basmati exports, but also its position in crucial markets like the European Union, the United Kingdom, Middle East and West Asia. In addition, the patent on Basmati is believed to be a violation of the fundamental fact that the long grain aromatic rice grown only in Punjab, Haryana, and Uttar Pradesh is called Basmati.

According to the Agricultural and Processed Food Products Export Development Authority (APEDA), India is the second largest producer of rice after China, and grows over a tenth of the world's wheat. RiceTec Inc was issued the Patent number 5663484 on Basmati rice lines and grains on September 2, 1997.

According to Dr. Vandana Shiva, director of a Delhi-based research foundation which monitors issues involving patents and biopiracy, the main aim for obtaining the patent by RiceTec Inc. is to fool the consumers in believing there is no difference between spurious Basmati and real Basmati. Moreover, she claims the "theft involved in the Basmati patent is, therefore, threefold: a theft of collective intellectual and biodiversity heritage on Indian farmers, a theft from Indian traders and exporters whose markets are being stolen by RiceTec Inc, and finally a deception of consumers since RiceTec is using a stolen name Basmati for rice which

are derived from Indian rice but not grown in India, and hence are not the same quality."

In an official release, the government of India reacted immediately after learning of the Basmati patent issued to RiceTec Inc., stating that it would approach the US patent office and urge them to re-examine the patent to a United States firm to grow and sell rice under the Basmati brand name in order to protect India's interests, particularly those of growers and exporters. Furthermore, a high level inter-ministerial group comprising of representatives of the ministries and departments of commerce, industry, external affairs, Council for scientific and industrial research (CSIR), Agriculture, Bio-technology, All India Rice Exporters Association (AIREA), APEDA, and Indian Council of Agricultural Research (ICAR) were mobilized to begin an in-depth examination of the case. The government of India was particularly concerned about the patenting of Basmati.

In the presence of widespread uprising among farmers and exporters, the nation of India as a whole felt confident of being able to successfully challenge the Basmati patent by RiceTec Inc. The law firm representing India in the dispute, Sagar and Suri, criticised the procedures for granting patents in the US claiming it is diametrically opposite to the one followed in India and Europe. According to them, India first examines a patent application, then widely publishes it for third parties to challenge, and only then grants the patent. However, the US keeps the patent application a closely guarded secret and grants it without allowing other parties to challenge it.

Indians feel that the US government's decision to grant a patent for the prized Basmati rice violates the International Treaty on Trade Related Intellectual Property Rights (TRIPS). The president of the Associated Chambers of Commerce (ASSOCHAM) said Basmati rice is traditionally grown in India and Pakistan and granting patent to it violated the Geographical Indications act under the TRIPS. As a result, it is safe to say Basmati rice is as exclusively associated with India and Pakistan as Champagne is to France and Scotch Whiskey is to Scotland.

In the wake of the problems with patents that India has experienced in recent years, they have now realized the importance of enacting laws for conserving biodiversity and controlling piracy as well as intellectual protection legislation that conform to international laws. There was a widespread belief that RiceTec Inc took out a patent on Basmati only because of weak, non-existent Indian laws and the government's philosophical attitude that natural products should not be patented. According to some Indian Experts in the field of genetic wealth, India needs to formulate a long-term strategy to protect its bio-resources from future bio-piracy and or theft.

The type of measure being utilized was accusing the RiceTec Inc and the US of violating the Geographical indication act of the TRIPS agreement in the WTO. But first, India and Pakistan filed a petition to the US patent office to re-examine the patent on Basmati claiming Basmati has been grown in their regions for thousands of years and is common knowledge in India and thus cannot be patented.

CONCLUSION

India is one of the richest countries in the world India in terms of possessing tremendous diversity in rice varieties. There are different varieties of rice-depending on the weather, soil, structure, characteristics and purposes.

The “multifunctionality” of agriculture in terms of environmental, social and cultural concerns is being used to defend the permanence of blue and green box payments. In Japan, most of the emphasis on multifunctionality and food security is in relation to rice. In developed countries where rice is a non-marginal crop, the elimination of blue or green box support would considerably impair the sector. Rice production sites are often the natural habitat of a wide variety of birds and plants. Water management in ricelands ensures that the soil desalination process essential to the maintenance of land fertility takes place. Environmental concerns are consequently a frequently used weapon in defence of the sector.

Food safety is not particularly relevant to rice, although there is increasing concern regarding GMOs (genetically modified organisms). While some rice varieties are being developed with new genes (e.g. carotene-enriched rice), they are not yet traded internationally.

According to Dr. Richaria, one of the most eminent rice scientists of the world, 400000 varieties of rice existed in India during the Vedic period. He estimated that, even today 200000 varieties of rice exist in India which is indeed an exceptionally high number. This means that even if a person eats a new rice variety every day of the year he has to live for over hundred years without reusing a variety. Every variety has a specific purpose and utility. The harvesting area of rice in India is the world's largest.

Rice is an important aspect of life in the Southeast and other parts of Asia. For centuries, it has been the cornerstone of their food and culture. During this period,

farming communities throughout the region developed, nurtured, and conserved over a hundred thousand distinct varieties of rice to suit different tastes and needs.

Rice is a major food staple and a mainstay for the rural population and their food security. It is mainly cultivated by small farmers in holdings of less than 1 ha. Rice is also a “wage” commodity for workers in the cash crop or non-agricultural sectors. This duality has given rise to conflicting policy objectives, with policy-makers intervening to save farmers when prices drop, or to defend consumer purchasing power when there are sudden price increases.

Rice is vital for the nutrition of much of the population in Asia, as well as in Latin America and the Caribbean and in Africa; it is central to the food security of over half the world population, not to mention to the culture of many communities. Rice is therefore considered a “strategic” commodity in many countries and is, consequently, subject to a wide range of government controls and interventions.

AGENCIES EXPORTING RICE

1. SHRIL: An ISO 9001-2000 Certified Company dealing in Indian long grain white basmati rice, brown basmati rice.

2. SRI GAJANAN AGRO MILLS (INDIA) PVT. LTD, NIZAMABAD, ANDHRA PRADESH: Since last 50 years in the processing of high quality premium grade non basmati rice and broken rice.

3. TRISTAR OVERSEAS, New Delhi, Delhi: Exporter of variety of basmati rice like traditional basmati rice, pure basmati rice, sharbati rice, shabnam basmati rice, parmal basmati rice

4. USA RICE: USA Rice Federation is a national association representing producers, millers and allied businesses advancing the use and consumption of U.S.

5. BASMATI ASSOCIATES, Navi Mumbai, Maharashtra: Basmati rice traders and exporters and provides the premium brand of basmati from the company Jagat Agro in Mumbai.

PRIMARY DATA

INFORMATION ON THE COMPANY

The organization we visited is a rice export mill named Karari Rice Mill Enterprises.

It is situated in Nallasopara in Thane district of Maharashtra, India.

Mr. Karari is the owner of the firm.

They are rice, grain merchant and commission agent.

Karari Rice Mill Enterprises deals in long grain white basmati rice, brown Basmati rice and broken rice.

Karari Rice Mill Enterprises, Gass Road, Nallasopara (W), Thane-401203, Maharashtra.

www.indianriceexports.com

www.agriculture-industry-india.com

http:/exportsproblems.com

www.basmatirice.com

www.lalqila.com