Basmati rice export prices are likely to rise by about 20% due to rising logistics costs caused by trade route disruptions in the Red Sea region, two people with direct knowledge of the matter said.
However, Basmati demand is not expected to be affected unless the unrest persists for an extended period, leading to a further price rise, they said.
Logistics firms were forced to suspend operations, and opt for longer routes to reach destinations in Europe and Middle East, after Yemen’s Houthi group launched attacks using drones and missiles on commercial ships at the southern end of the Red Sea. The Middle East is one of the largest export markets for Basmati rice.
“Demand for Basmati rice, especially in the Middle East, is unlikely to be impacted with a 20% price rise. However, if the disruptions in the Red Sea persist, prices could be hiked further," one of the people, a government official, said.
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