New Delhi: The Union commerce ministry has decided to develop a database that will allow overseas buyers to track the supply chain for basmati, the aromatic long-grained rice grown in northern India, to guarantee that the produce meets international standards of quality and safety.
India had previously expressed reservations over the proposal, worrying that it could be used to block imports. The reversal comes at a time when India is seeking to expand its share of 0.3% in the $3.2 trillion (Rs136 trillion) global food and beverages trade.
For trade gain: A file picture of rice being transplanted in the Chandigarh-Ludhiana belt. Nearly 60% of India’s basmati rice is exported to West Asia, followed by Europe and the US. Photograph: Madhu Kapparath / Mint
Countries in North America and Europe have been demanding stricter food safety regulations for imports. Basmati exports, valued at Rs2,400 crore ($570 million) last year, are also facing such constraints, known as non-tariff barriers.
“In domestic and global food markets, quality and safety have become critical requirements for enterprises producing food and food-related services,” Subodh Kant Sahai, minister of state for food processing industries, said at the Processed Food Advantage India 2008 summit organized recently in New Delhi.
Basmati accounts for 2% of India’s total rice production of 72-75 million tonnes (mt).
“It’s the Champagne of Indian rice. Although traceability may seem to be a non-tariff barrier, it is a good thing because it will preserve its purity. If we lose it, we will lose the product,” says Gokul Patnaik, an agricultural business consultant and former bureaucrat who lobbied to promote basmati and get special tax rebates for it with the European Commission in the early 1990s.
The so-called traceability is a process that seamlessly connect the supply chain of a product from the farm to the importer.
The basmati database, to be developed by the Agricultural and Processed Food Products Export Development Authority, or Apeda, will be accessible to any overseas buyer who seeks details of any batch of basmati imports.
Under international guidelines, it’s mandatory to produce certificates of origin and food safety clearances. These are prescribed by the so-called Codex Alimentarius Commission, or Codex, set up by the UN’s Food and Agriculture Organization.
The government now wants to take it a step further by ensuring traceability.
“The completion of this exercise will establish India’s good agricultural practices and will fetch better prices,” says S. Dave, director of Apeda.
According to Dave, the value-chain building for basmati rice will start in September and will take at least nine months to complete, but refused to disclose the financial details.
The latest initiative will be similar to what Apeda, which is part of the commerce ministry, had done last year when it developed a detailed database of 45,000 grape growers.
In 2003, the European Commission had threatened to impose safeguard measures and recalled Indian grapes for containing pesticide residues above permissible levels.
Known as the Grapenet, the online software detailed each cultivator and his produce, listing names and plot sizes as well as clinical details such as smell, temperature, skin defects and size of the fruit, sealing off the details with a bar code number in the end.
About euro 9 million (Rs59.5 crore) was spent over a period of five years to cover the 45,000 grape growers and a referral laboratory established inside the campus of the Pune-based National Research Centre for Grapes to assist farmers.
“In the beginning, you have to treat farmers and exporters like children to make them understand what they will gain. But all that talking helped,” says Dave. Grape exports, he said, have risen from 25,680 tonnes in 2003 to 38,518 tonnes last year.
Dave said plans are also underway to launch a similar database for honey and fruits such as mango, which even after years of trade talks has failed to gain access to the markets in Australia and New Zealand.
While many exporters think the government’s trace-back-to-the-farm project will improve India’s international brand image, they worry how it will be implemented in a fragmented market where average supply from farmers is less than five tonnes.
Some maintain the idea might make sense for high-value, low-volume products such as organic tea, juice brands, or even for fruits such as mango and grape, but it will be difficult to monitor bulk staples such as rice where handling capacity at a mill is between 4 and 10 tonnes an hour.
Others say it will be feasible to trace details about a product’s origin only when contract farming has achieved a critical mass; contract sales account for less than 10% of the total crop.
Nearly 60% of India’s basmati rice is exported to West Asia, followed by Europe and the US. According to All India Rice Exporters’ Association, India exported 1.1 mt of basmati valued at Rs2,400 crore last year.
The need, says R.S. Seshadri, director of Tildarice Pvt. Ltd, is to impart good agricultural practices to farmers to improve quality. The company, which has some 85,000 farmers on its database, offers advice on selection and purchase of seeds and fertilizer. “For the long-term sustainability of exports, we have to improve the entire base of agriculture practices and cannot rely on pockets of excellence,” says Seshadri.
With India emerging as a food sourcing destination, companies will likely embrace the government’s initiative sooner than later.
“Buyers and food chains across the US and the UK are getting very particular about where the paddy originates,” says Kamal Poplai, vice-president of LT Overseas Ltd, which markets the Daawat rice brand.
“In the foreseeable future, it may become a prerequisite to enter the mainstream food chain.”