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CASE STUDY ON BASMATI RICE Submitted By, ANKIT VERMA
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Page 1: Product presentation basmati rice export

CASE STUDY ON BASMATI RICE

Submitted By,ANKIT VERMA

Page 2: Product presentation basmati rice export

As we know agriculture is one of the strongholds of Indian

economy providing direct employment to 50%-60% people

working in country. It forms the basis of many premier

industries of India Including textile , jute and sugar, rice

industries .Agriculture sector contributes 17.5% to

country’s GDP & 30% exports are of agri-products . In the

last 5 yrs this sector showed a growth of 30% & it will

Sustain the growth in future as well. Today India is the

leading producers & exporter of various agri-products , rice

Being one of them. India is 2nd largest producer of rice after

CHINA & 3rdLargest exporter of rice & largest exporter of

Basmati rice followed by Pakistan as per FAO.

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63%

20%

18%

GDP Composition by Sector

Services

Industry

Agriculture

Based on Rabobank report

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2/3 rd of world population consumes rice.

Global rice production has fluctuated between 450 -500 million tons.

Global consumption of rice is around 510-520 tons has been above production in recent years.

Asia is the biggest rice producer , accounting for 90% world’s production & consumption

China is the largest producer of rice, followed by India, Indonesia , Bangladesh , Vietnam etc.

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28.80%

21.60%

8.60%

6.90%

5.70%

4.60%

4.00%

2.40%

1.80%1.70%1.40% 1.30%

Major rice producers of the world

China

India

Indionesia

Bangladesh

Vietnam

Thailand

Myanamar

Philippines

Brazil

Japan

USA

Pakistan

Page 6: Product presentation basmati rice export

Thailand is the largest exporter of rice ,Vietnam being the second largest and India is the third largest exporter.

Basmati rice accounts for 10-12% of global exports of rice.

Philippines is the largest importer of rice , other rice importing countries are Europe , Japan middle east countries etc..

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34.50%

16.50%

14.10%

10.60%

6.30%

3.10%

2.90%2.30%

2.10%1.20%1.10% 0.90% 0.60% 0.50%

Major Rice Exporting Countries of the world

Thailand

Vietnam

India

Pakistan

USA

China

Egypt

Italy

Uruguay

Spain

Argentina

UAE

Belgium

Myanmar

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India’s annual rice production for 2008-2009 was 99.15 million tonnes and it is expected to cross 110 million tonnes for 2010.

There are more than 4000 varieties of rice grown in different parts of the country & is grown in both seasons Kharif (80-85%) & Rabi.

India is the third largest exporter of rice and it exports both non-basmati and basmati rice.

India is exporting basmati rice since 1985 on a regular basis but exports of non basmati rice is subjected to some restrictions.

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Basmati rice means “queen of fragrance “ or the perfumed one . It is also known pearls of rice

Indian Basmati rice is a long grained aromatic rice with unique , pleasing & appetizing aroma .

It is the aroma that gives its novel characteristics unmatched by any other rice grain anywhere else in the world. Thus it is considered world’s best quality rice .

It is grown in small part of indo gangetic plains at foothills of Himalayas in the north of country . The area in which it is grown is geographically well defined & includes Haryana , western U.P , H.P J&K , Punjab . The climate & soil in this region combines to give Indian Basmati its unique qualities & characteristics . Its unique qualities & characteristics cannot be replicated if grown elsewhere in the world. Thus basmati rice is produced only in India & a small part of Pakistan. Thus it is considered nature’s gift to India .

Page 10: Product presentation basmati rice export

Due to its characteristics & quality basmati rice commands highest price among all the varieties in the world & also fetches higher prices in international market .

Its export is an important source of foreign exchange of country.

80% of basmati rice produced in India is exported to various countries of the world .

85% of world’s basmati rice is exported from India & remaining 15% is exported from Pakistan .

There are many varieties of basmati rice grown in India .Under section -5 seed act 1966, India has notified 11 varieties of basmati rice . They are basmati 370 , basmati 386 , type-3 , taraori basmati hbc-19 , basmati 217 ,ranbir basmati , pusa basmati-l , Punjab basmati-1 , Haryana basmati -1 , kasturi basmati , mahi sugandha . All these varieties are exported from India . Thus India is a hub of basmati rice & its products .

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85%

15%

Major Producers of Basmati rice

INDIA PAKISTAN

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While processing basmati rice various bi- products like husk , bran , broken rice are produced as well. All these products are sold in the market for good prices for instance bran of rice is used to produce rice bran oil which is also been exported to various countries as it is good for heart & is used for cooking

similarly broken rice is sold in domestic market & husk is sold to power companies as they use it to generate electricity. Thus there is no wastage of resources & manufacturer exporter can earn huge dividends .

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Since basmati rice is produced only in India & Pakistan both the countries have monopoly on this product as a result exporters dealing in basmati rice earns huge profit .

Basmati rice as already mentioned is a high quality rice & it fetches high price in international market.

Due to limited supply & increasing demand of this grain every year any exporter dealing in this product doesn’t have to worry about its prospects . Its safe & surely a profitable export item .

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Introduction

Organic BasmatiRice , Rice Bread

Growth

Super BasmatiRice , ReadyTo Eat Rice.

Maturity Decline

Y-axis:- salesX-axis:- time

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The product life cycle curve for Basmati rice will never reach decline stage as food grains can never be out of demand .

The sales of the basmati rice and its value added products increases very slowly in introduction stage but it increases very rapidly

in growth stage as result of which in growth stage the graph is linear in shape .

The growth period of PLC curve shall be very large and basmati rice may or may not reach maturity stage.

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EXW ( Karnal ) Cost Of 25.75 Metric Tonne basmati rice = Rs 1258750

Total Cost Of Packaging 25.75 metric tonnes Basmati Rice = Rs 100000

Total Cost Of Production for 25.75 (25750 kg ) metric tonnes Basmati rice = Rs 1158750

Cost of production for 1 kg Basmati rice = Rs 45

1metric tonne = 1000 kg

Calculation of FOB ( Mumbai ) price for one container having 25.75 metric tonne Basmati rice

The government of India has set a floor price for the export of basmati rice at $900/tonne . It is expected that government will further lower the price too $800/tonne so that our exporters can compete with Pakistan .

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FOB (MUMBAI) For 25.75 Metric Tonne Rice IN USD = USD 35444.44

1 USD = Rs 45

FOB(MUMBAI) For 25.75 metric tonne→1258750+251750+50000+4500+30000=Rs 1595000

Export Credit Insurance = 30000

Cost Of Documentation = Rs 4500

Transportation & Handling Charges = Rs 50000

Profit is 20% of Rs 1258750 = Rs 251750

Profit Policy Is 20 % EXW ( Karnal ) Cost

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Although Indian Basmati rice is quite popular in

world market still in order to increase the market

share of this product in world’s rice market , to

capture emerging markets & to compete with our

rivals (Pakistani Basmati rice) following market

strategies are adopted :-

Advertisements :- An innovative and creative add created with international market in mind can increase the sales . Many manufacturers Exporters follow this strategy.

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Participating in International trade fairs , international food shows & international food festivals like food show of New York , Berlin food festival etc is another way marketing.

Packaging of product is another way of marketing the product. An attractive packing of basmati rice is useful in attracting the customers .

Internet is another and cheapest way of marketing the product . Creating your own website and displaying your product catalogue on it with complete details and giving adds on various sites is another way of creating market .

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Exporting Basmati rice is a highly profitable business as it is evident from the fact that all those exporters who were exporting basmati rice have attained the status of export houses , trading house , star trading houses & super star trading houses .

Even the government of India has many schemes through which it can extend a financial help upto 75 lakh rupees for starting a food processing unit .

The basmati rice & its value added products have a huge market . The sale – ability of basmati rice is very high as it various uses like medicinal use, consumed as food etc .

Moreover today the living standard of people in India & other countries is improving thus more & more people are switching to basmati rice . That is why exports of basmati rice in last three years have increased significantly inspite of global meltdown .

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According to APEDA Indian Basmati rice has a huge market & is growing every year . In 2008 -2009 basmati rice was exported to more than 70 countries.

The major importing countries for basmati rice for 2008-2009 are :-

Saudi Arabia

UAE

IRAN

KUWAIT

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UK

USA

Emerging Markets Of Basmati rice

During the global recession the exports of basmati rice to many developed countries got affected as result exporters started exporting basmati rice to developing nations. The government of India also encouraged this policy as result of which a new market for basmati rice has emerged. Few emerging markets are Mauritius , Singapore , Belgium , African countries like Brazil , Ghana etc

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MAJOR IMPORTERS OF INDIAN BASMATI RICE

SAUDI ARABIA

UAE

IRAN

KUWAIT

UK

USA

YEMEN

OMAN

CANADA

NETHERLAND

QATAR

BASED ON DGCIS DATA

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India has been exporting basmati rice since 1985.

Since then India has covered a long way. Many

Value additions has been made at various levels

in order to increase market share & make exports

of basmati rice more profitable business. These

Value additions has also been done in accordance

with changing demand trends and needs of various

consumers worldwide. Following are the few

value additions that has been done in Basmati rice.

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Ready to cook rice products like ready to eat

vegetable Pulao , Mutter Pulao , paneer tikka biryani etc.

Flavoured basmati rice products in which seasonings are flavoured to match popular Indian tastes such as ginger-garlic , lemon , masala , tomato . The seasonings will be packed separately

in pouches & sold along with plain basmati rice.

Saffron basmati rice (kesar chaval) is another product becoming popular these days and is being exported in middle east countries .

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Rice Bread came out just few year ago. It is now beingdeveloped into several type of bread & they are quite attractive to consumers of Japan despite the fact that they are expensive. In the world market the cost of rice bread is still much greater than wheat bread however, it has the potential to grow in many countries in future . Nowadays gluten-free rice bread (100%rice) has been developed. This type of bread are good for those who are allergic to gluten.

Organic Basmati rice largely exported to E.U countries .This rice has high nutritious value & is grown without any use of synthetic or artificial pesticides .Thus it is a eco friendly product.

Lastly Instant rice noodles & rice chips are two new products which are still in developing stage & will be soon launched in market .

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Ready To Eat Basmati Rice

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Flavoured Basmati Rice Products

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Various Types Of Rice Bread

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Some More Value Added Products of Basmati rice

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Attractive Packaging of basmati rice so as to attract customers. Earlier rice was packed in simple gunny or jute bags now it is been packed in jars, polypropylene bags , high value paper bags with vibrant colours like blue , red ,yellow etc .

Vacuum packaging of basmati rice is another value addition which is being done these days. It increases self life of product & also retains aroma of the product.

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