Destination and direction of Indian basmati rice exports - a markov chain approach

Throughout history rice has been one of man's most important foods. Today, this unique grain helps sustain two -thirds of the world's population. Rice is an important agricultural commodity in the international trade of India. India has been exporting rice for the past few decades. Of the total rice exports basmati rice's share is more than half. Compared to all grades of rice, it is the basmati rice of Indian subcontinent which gets the highest price in the international market due to its super fine aromatic quality. In India, every year, nearly 50–70 percent of the basmati rice produced is exported. Therefore, basmati rice continues to hold a significant shAre in the export basket of the country. Hence in the present study an attempt has been made to study export scenario of basmati rice with a specific objective of analyzing the direction and changing pattern of exports. The analysis has been done with the help of time series data covering the period 1987–2007 at all India level, by employing Markov chain model that captures the neteffect in change in the exports. Results reveled that there are five major countries importing Indian basmati rice, namely, Saudi Arabia, Kuwait, UK, USA and UAE, which accounted for 80 to 90 percent in 2006–2007. The results of Markov chain analysis reveled that the exports would likely to be concentrated in Saudi Arabia, UAE and UK in the future. A high dependence on one or two export markets would increase the trade risk in the long run. Therefore, appropriate export promotion strategies have to be evolved to diversify the geographical concentration. To promote Indian basmati in international market, the brand promotion, advertisement and consumer awareness campaigns would have to be carried out rigorously.