Prices of pure Indian basmati rice could become dearer in the local markets by May, as local traders face shortages, according to market sources.

In such a scenario, retail prices could go up by as much as 20 per cent, even discounting the possibility of any increases stemming from higher freight charges.

And if shipping rates do go up in the short term, the possibility of a much higher price gain on basmati cannot be ruled out.

So far, local prices have been stable, with the premium variety going for around Dh5 to Dh6 a kilo. Based on conservative estimates, Indian premium basmati may account for about 7 to 10 per cent of the overall rice consumption in the UAE.

And of the overall rice imports, India's share would be about 45 per cent for local consumption, excluding re-exports.

Already, in key European markets, prices of pure Indian basmati have been on the rise in recent weeks. Europe is one of the biggest importers of the commodity.

"India has had a weak basmati crop during November, which is the traditional cropping season, because of poor monsoons in the growing areas. The purchase price from the Indian basmati farmer has already shot up by 20 to 30 per cent in the last few months.

"But it will take a further few months before the crop reaches the consumer, and we should have the first indications of any price increase locally by then," said an official with a major distributor of Indian basmati in Dubai.

"Local distributors have so far not made any decision on what sort of price increase should be factored in."

India annually exports 850,000 tonnes of basmati, with Saudi Arabia being the main buyer, followed by the North American and European markets.

Ironically, the crop of pure basmati that hit the Indian market was of "exceptionally good" quality.
Barring rainfall, all other weather conditions were ideal for traditional basmati and those farmers who had access to irrigation water and who did plant traditional basmati have had an excellent quality of crop.

"The situation, therefore, is a substantially smaller harvest than usual, but a crop of excellent quality," said the source.

Some Indian basmati exporters may also be shipping the blended varieties to make up for any shortfall in the "pure" supplies to this market, which could go some way towards holding prices down and prevent them from creeping up beyond a certain limit.

On the Pakistani basmati exports to this country, there have been no major changes in the status quo so far. Their average prices now hover at the Dh3 per kilo mark.