As KRBL handles the recall, Punjab farmers face a crisis, with paddy crops unsold or sold at significantly lower prices.
Chandigarh: KRBL Limited, one of the world’s largest Basmati rice exporters and maker of the India Gate brand has recalled its “India Gate Pure Basmati Rice Feast Rozzana Super Value Pack (10% Extra)” after detecting pesticides, Thiamethoxam and Isoproturon, over permissible limits. These chemicals pose potential health risks, particularly to kidney and liver functions. The recall affects one-kilogram packets packed in January 2024, with an expiration date of December 2025. While KRBL manages the recall, farmers in Punjab face a crisis. Paddy crops are either not being lifted from mandis or are being sold at much lower prices. The Basmati 1509 variety, a crucial part of Punjab’s rice economy, has dropped to Rs 2,600-3,000 per quintal, compared to Rs 3,500-3,600 per quintal last year, frustrating farmers.
KRBL clarified that the recall was limited to a single batch. A spokesperson stated, “Upon discovering the issue, we identified the batch and initiated a recall. We are reinforcing our due diligence processes to maintain the highest quality standards.” The company added that pesticide control occurs at the farm level, and they are working with farmers and regulators to reduce the use of chemicals like Thiamethoxam and Isoproturon.
KRBL’s key rice mill in Dhuri, Punjab, is a critical part of its supply chain, processing large quantities of Basmati for domestic and export markets. Following the recall, KRBL’s stock price fell by 1.74% on the NSE on September 27, 2024.
Contributing to the decline in prices is the Minimum Export Price (MEP) cap imposed by the central government in August 2023, which set a floor price of $1,200 per tonne on Basmati exports. Although the MEP was recently lifted, global uncertainties, particularly the Israel-Iran conflict, continue to depress prices. Iran, a key importer of Indian Basmati, has placed fewer orders this year due to geopolitical tensions. An exporter, speaking anonymously, expressed concerns about disruptions in trade with Iran and other Middle Eastern countries, which could severely impact revenues. “Without exports to Iran, we must rely on the domestic market, where Basmati doesn’t fetch premium prices. This uncertainty is forcing us to offer lower prices to farmers,” the exporter explained.
Farmers like Shanky Singh from Amritsar are feeling the pinch. “Last year, I sold my Basmati 1509 for Rs 3,650 per quintal. Today, I had to settle for Rs 2,600,” he lamented. Other farmers have echoed similar sentiments as prices hit a four-year low. Even with around 42 lakh bags of Basmati 1509 arriving at Amritsar’s Bhagtanwala mandi, prices remain low due to export market uncertainties.
Rakesh Tuli, president of the Punjab Anaaj Mandi Mazdoor Union, highlighted that Basmati rice is not procured by the government, leaving farmers at the mercy of private traders and exporters. “The price is dictated by international demand, and with domestic consumption below 10%, there’s little incentive for traders to pay more when export prospects are weak,” he said.
Farmers are urging the government to intervene, claiming that traders are exploiting the situation by purchasing Basmati at low prices and reselling it at much higher rates. Harminder Singh, a farmer in Amritsar mandi, said, “The government must ensure fair pricing. We are being exploited.”
Rana Gurjeet Singh, an MLA from Kapurthala, has called on both the central and state governments to support Punjab’s Basmati farmers. He criticised the state for pushing farmers to shift from water-intensive crops to Basmati, only for prices to collapse. “The government promised to create a fund to support non-paddy crops. Now that farmers have diversified, it’s time for the government to act,” he said.
Singh also urged the Agricultural and Processed Food Products Export Development Authority (APEDA) to facilitate exports. Basmati exports generate an estimated Rs 48,000 crore annually and are vital for Punjab’s water conservation efforts. However, with rising logistics costs and fewer orders from the Middle East, Basmati farmers are under immense financial strain.
Iran, which typically imports about 4 lakh tons of Basmati annually, has ordered only 1 lakh tons this year, further driving prices down. The Israel-Iran conflict has only added to the complications. “Farmers are being forced to sell at distress prices. The government must step in and provide support,” Singh added. Basmati prices are now around Rs 3,300 per quintal—down Rs 2,000 from last year.