In this report, we examine India’s Basmati1 rice industry. We outline the industry’s attributes in a global context and highlight the key variables for investment consideration in the sector. Basmati is the champagne of rice. And like champagne, it has a legally enforced regional denomination. Basmati can only be produced in India and a small part of Pakistan. As a grain staple, it has a unique combination of characteristics that has positioned the grain to achieve higher pricing in the marketplace. Basmati rice has distinctive and pleasant aromas, long slender grains, and on cooking sees both extreme grain elongation and dry fluffy texture.
BACKGROUND
The size of the global rice industry is approximately 459 million metric tonnes (mn MT), or USD 275 billion of which Basmati industry accounts for 6.7 mn MT or USD 5.8 billion (2.1%). India accounts for ~72% of Basmati produced or 4.8 mn MT (USD 4.4 billion) and Pakistan 28% or 1.9 mn MT (USD 1.4 billion). Although Basmati represents a small part of India’s USD 221 billion agriculture industry, it offers India, its leading producer, high product visibility in the world market.
We believe that there will be a sustained growth in supply in coming years due to the development of PUSA 1121 Basmati (an evolved2 Basmati variety) which has improved farmers’ margins (Table 5) and increased yields (Table 4). We estimate that Basmati rice demand has grown at a CAGR of 10.5% during 2001-12 (as compared to 1.2% for rice as a whole), led by strong demand from both domestic and international markets.
BACKGROUND
The size of the global rice industry is approximately 459 million metric tonnes (mn MT), or USD 275 billion of which Basmati industry accounts for 6.7 mn MT or USD 5.8 billion (2.1%). India accounts for ~72% of Basmati produced or 4.8 mn MT (USD 4.4 billion) and Pakistan 28% or 1.9 mn MT (USD 1.4 billion). Although Basmati represents a small part of India’s USD 221 billion agriculture industry, it offers India, its leading producer, high product visibility in the world market.
We believe that there will be a sustained growth in supply in coming years due to the development of PUSA 1121 Basmati (an evolved2 Basmati variety) which has improved farmers’ margins (Table 5) and increased yields (Table 4). We estimate that Basmati rice demand has grown at a CAGR of 10.5% during 2001-12 (as compared to 1.2% for rice as a whole), led by strong demand from both domestic and international markets.