TABLE OF

CONTENTS

CHAPTER 1 1. Introduction 3
2. Cultural Analysis 4
3. Socio - Economic Conditions 4
4. Difficulties and challenges faced 5

CHAPTER 2 1. SWOT analysis 7

2. Competitors 9

CHAPTER 3 1. Situation Analysis 11

2. Market Profitability 13
3. 4 P’S of marketing 15
4. Reference 17
CHAPTER - ONE

COUNTRY: SAUDI ARABIA

PRODUCT: BASMATI RICE

INTRODUCTION

India is the second largest producer of rice in the world producing 178 Million tones including
non-basmati and basmati rice.

WHY BASMATI CAN'T BE CULTIVATED

Any type of soil can be used to grow basmati rice. But loamy, clay, and heavy neutral soils like
clay loam are great for growing it. These soils have the ability to keep water in them for a longer
time. For better yield, soil should have a pH between 5.0 and 8.5. But Saudi Arabia's soil is
dominated by sandy and sandy loam soil with a very low percentage of clay and organic matter.

And also farmers said that the Rice consumes about 4,000 - 5,000 liters of water per kg of grain
produced. The Second obstacle to agriculture in Saudi Arabia and the deciding factor as to where
cultivation took place has always been the availability of water, and more specifically the
scarcity of water. There are no rivers or lakes in the kingdom. Over the majority of the nation,
there is just mild, erratic rainfall.

Saudi Arabia tends to import more expensive rice due to consumer preferences (Alamri &
Saghaian, 2018). Therefore, countries exporting to Sau- di market not only face a very large
market for high-valued rice, but they also face intense competition for market share

CULTURAL ANALYSIS OF BASMATI RICE IN SAUDI ARABIA

90% of Saudi Arabia's population, according to government statistics, are Sunni Muslims, and
10% are Shia. Muslim migrant workers make up more than 30% of the population; they are not
all Muslims. In Saudi Arabia, rice is one of the most popular foods, and culture and traditions
have an impact on how much is consumed there. In Saudi Arabia, a classic dish called "Kabsah"
is made with rice and meat. In 2016, each person ate 47 kg of rice. There are more than 1500
different varieties of rice. But in Saudi Arabia, "Basmati" rice is most frequently consumed,
followed by American rice and Calrose rice. In addition to infant food made from short or
medium grain rice, there were a number of industries based on rice goods, including rice oil used
in the production of cosmetics and the lubricating of leather. In general, their meal mostly
consists of Meat, rice, lamb, chicken, yogurt, potatoes, seafood and dates. As Saudi Arabian
culture has become more aware of Indian cuisine, there has been an increase in consumer
demand for basmati rice in recent years. Food suppliers and restaurants that offer Indian cuisine
now import Basmati Rice from India to accommodate their growing customer base. This rise in
popularity is also partly due to popular television series focusing on South Asian culture which
is produced in the country. In 2015, demand for Basmati reached 32,000 tones which were
valued at USD 50 million. However, over 70% of total consumption came from imports to
satisfy local demand.

SOCIO ECONOMIC CONDITIONS

From its level in 2021, the per capita GDP increased 1.5% to US$17,800 (in current values) in
2022. Real GDP growth would be positively impacted by a significant increase in oil prices,
which might also boost production costs and government revenue. Due to political constraints,
energy subsidies are anticipated to continue; nevertheless, modest economic benefits should
compensate for these consequences. It is anticipated that gross international reserves will rise by
24% with an inflation rate of 4% and a sustainable current account surplus of 15%. This will
encourage the influx of foreign direct investment while also lowering interest rates, lowering
government debt-to-GDP ratios, and increasing private sector credit demand.
Recent years have seen a sharp increase in the import of basmati rice, largely as a result of high
consumer demand and advantageous market conditions. In 2020, Saudi Arabia imported $1.37B
in Rice, becoming the 2nd largest importer of Rice in the world. In the same year, Rice was the
12th most imported product in Saudi Arabia. Saudi Arabia imports Rice primarily from: India
($1.1B), United States ($106M), Pakistan ($97.1M), Thailand ($21.3M), and Vietnam ($19.4M).
Basmati rice from India and Patna rice from Pakistan dominate the market (known as Pakistan
medium grain Basmati). India supplied around 80% of all imported basmati. Strong distribution
networks are used by traders to bring basmati into Saudi Arabia. The majority of imported
basmati is sold by commission brokers or trading firms that are owned by Indian and Pakistani
business families; these businesses usually have warehouses, retail stores, or both in Saudi
Arabia's major cities.

DIFFICULTIES AND CHALLENGES FACED IN EXPORTING RICE TO SAUDI

ARABIA

● Saudi Government Support to Agriculture Sector Expands Market Size

Saudi Arabia has been producing rice on a large scale, which led to its self-sufficiency in
rice production and export of rice to other Middle Eastern countries. Government
assistance for the agricultural industry is anticipated to expand, as are subsidies for
pesticides and equipment inputs. Crops are grown using these inputs. It will support
Saudi Arabia's increased crop production.

● Illegal trading and Middlemen problems

Although basmati rice is one of the most important agricultural exports from India, many
problems have emerged recently. First off, there is still a significant amount of illegal
basmati rice trading and sales taking place within India. In actuality, unlicensed rice
traders who use fake permits or no licenses at all account for 40% of all Indian rice
exports. Aside from that, it has been challenging for importers to turn a profit on bringing
 basmati rice from India due to high manufacturing costs and low prices caused by several
middlemen participating in the supply chain.

● EXPORT DUTY

Due to the prohibition on the export of broken rice and the 20% export tax on some
varieties of non-basmati rice, India's rice exports are predicted to fall by 4-5 million tone
(mt) in the current fiscal year from a record 21 mt in 2021–22. But the export duty was
not for the basmati rice but in near future anything could happen.
CHAPTER - TWO

SWOT ANALYSIS

STRENGTH

● Low Production Cost - According to the research done by Agri Farming, It costs around
Rs.27,940 for cultivating Basmati rice in one acre land However, slight changes in
overall cost of cultivation may occur based on a number of factors like pest incidence,
climate, and other abiotic factors.

● No Export Duty - As of November 2022 there is no export duty for Basmati Rice but
according to a press release by the Department of Revenue on Sept 8 2022, under the
Ministry of Finance, the 20 per cent levy will be levied on export of rice in the husk
(paddy or rough), husked brown rice, semi-milled or wholly-milled rice,

● Demand is gradually increasing - According to the research done by Food Agriculture

Service, Post estimates rice consumption at 1.4 MMT in MY 2022/2023, which is up
from 1.3 MMT from the previous year. And also they’re the largest basmati rice
importing country in FY 2020-2021; Over 75% of basmati rice has been supplied by
India.

WEAKNESS

● Consumption has been reduced in surrounding countries (Iran) - For the third
consecutive year exports of basmati rice saw a fall over the previous year, This is due to
the loss of the traditional market of Iran due to US sanction. (They are the largest
 importer of Basmati rice in the past 3 years From FY 2017-18 to FY 2019-20)

● The Basmati rice consumes a high amount of water to cultivate - To cultivate 1 kg of

paddy farmers need to use on average 15,000 liters of water and most of the farmers are
mostly dependent on the rainwater. That’s their main source of water for irrigation. This
year the monsoon seasonal rainfall is well distributed spatially. But rain prediction for
next year is comparatively lower than the current year. This reduces the cultivation of the
basmati rice thus affects the export overall.

OPPORTUNITIES

● Using high-quality rice to prepare delicacies like banana bread, Spanish rice, oat
meals,and others will boost export demand

● India has one of the largest and fastest-expanding food marketplaces in the world. Due to
agro-climatic factors, exclusively produced in India and Pakistan, IPR of the name
"Basmati" rice enables the producers to demand a higher price from the international
markets.

● The creation of novel rice-based products that offer dietary and health benefits and have
the potential to capture a sizable portion of the domestic and international markets, To
accommodate consumer tastes, the items must be designed in a diversified and
nutritionally improved manner.

THREATS

● Profitability could suffer if Basmati rice consumption habits change or if demand

declines.

● Because rice farming is a seasonal activity, weather anomalies at that time may have a
negative effect on output.
 ● Lifting the minimum export price cap on basmati rice exports could attract new rivals.

● In order to meet domestic demand growth and lessen reliance on rice imports from India,
private businessmen and government organizations from Saudi Arabia have begun
buying arable land in African nations for food production.

● In an effort to plant aromatic and long-grain rice on land it has acquired in African
nations like Mali, Saudi Arabia has asked the IRRI for assistance.

COMPETITORS FROM OTHER COUNTRIES TO IMPORTING COUNTRY (Saudi

Arabia)

RICE EXPORTERS IN PAKISTAN RICE EXPORTERS IN VIETNAM

❖ Amir Rice Traders ❖ Gia International Corporation

❖ Garib Sons Pvt. Ltd ❖ JCC FOOD CO. LTD
❖ Texfab Corporation ❖ An Giang Import Export Company
❖ Khan Rice Mill ❖ Long an Food Company
❖ Kushwaha Rice Mill ❖ SWR Suwannaphum Rice
❖ Marvi enterprise ❖ TKR Rice Mill and Ash Co. Ltd.
❖ Mast Qalander Rice Mill ❖ Viet Hung Co.
❖ Mehmet Bayam ❖ Vilaconic Group
❖ Quality Rice Mill ❖ Vu Phat International co. Ltd.
❖ Kafi Commodities ❖ Asia Global Commodities

RICE EXPORTERS IN MYANMAR RICE EXPORTERS IN THAILAND

❖ Eurasia Group Co., LTD. ❖ Olam Thailand

 ❖ Agrastar ❖ ASIA INTERTRADE RICE EXPORT CO.,
❖ Gold Delta Co., Ltd. ❖ Ake Rice Mill Co. Ltd.
❖ Theingi Myanmar Rice ❖ Asia Union Exporting Co., Ltd. (AUECO)
❖ Agro Deco ❖ Capital Rice Co., Ltd.
❖ Golden Key Co. Ltd ❖ Global Brands International
❖ Signatures of Asia ❖ Global Precious Rice Co., Ltd.
❖ AgroCorp International Pvt.Ltd. ❖ Gravity Intertrade Co. Ltd.
❖ Aung Naing Thitsar ❖ MULTI BIZ Trading L.L.C
❖ Taw Win Nan Rice Mill ❖ SiamRiceExport.com

The above-mentioned countries are all neighboring countries and they have similar cost of
production as compared to India but India has a huge advantage in no export duty, Subsidy and
other political factors that the other countries do not have.
CHAPTER-THREE

SITUATIONAL ANALYSIS

BASMATI RICE industry in INDIA

In India, Basmati rice is mainly grown for exporting purposes. It accounts for 75% of global
Basmati rice production. In the financial year 2020-21, India exported around 4.6 million tonnes
of Basmati rice worth USD 6.5 billion

The majority of the world's basmati rice production and exports come from India. About two-
thirds of the nation's production, which ranges from 8 to 12 million tonnes annually, is exported.
The remainder is consumed domestically.

BASMATI RICE Industry in SAUDI

Saudi Arabia bought $1.37 billion worth of rice in 2020, moving up to the position of second-
largest rice importer globally. In Saudi Arabia, rice was the 12th most imported commodity in
the same year. India ($1.1B), the United States ($106M), Pakistan ($97.1M), Thailand ($21.3M),
and Vietnam ($19.4M) are the top five countries Saudi Arabia imports rice.

COMPETITORS

● RICE EXPORTERS TO SAUDI (From india)

 1. KRBL Limited

When it comes to rice exporting business, KRBL tops it. The 120-year-old
company has been exporting rice ever since 1889. KRBL Ltd. is India’s first
integrated rice company,

2. Amar Singh Chawal Wala- A house of Lal Qilla

Amar Singh Chawal Wala is India’s leading manufacturer of Basmati rice. The
ISO certified company is known for selling the finest and purest varieties of
Basmati rice.

3. D.D International Inc.

D.D International Private limited is considered amongst India’s largest exporters

of premium quality Basmati rice. Every year the company exports around
3,00,000 metric tons of rice.

4. Mahavir Rice & Gen. Mills

Mahavir Rice Mills is one of the leading companies in production and exportation
of Rice. It was established in 1985 and has been maintaining a good legacy for
the last 30 years.

● RICE IMPORTERS IN SAUDI (From Worldwide)

1. ABDULRAHMAN AND MOHD A AZIZ is the largest importer of 1121 basmati

rice and accounts for 920 shipments
2. Followed by RIYAD BANK with 349
3. AL SHAKHS TRADING CO at the 3rd spot with 260 shipments.
GOVERNMENT LAWs and RULES (For exporting rice to saudi arabia)

1. New implementation of FSMS

FSMS encompasses the two most specific quality specifications in the food sector. One
is based on ISO 22000 and another is Hazard Analysis and Critical Control Points
(HACCP). Supporting this, Merchants are advised to provide a certificate from the rice
source following Good Agricultural Practices (GAP).

Only rice mills registered under FSMS can export to Saudi Arabia and merchants
need to procure from FSMS units only.

This new regulation might decline the exports of basmati rice from India to Saudi arabia.

2. Implementation of COC

The Saudi Food & Drug Authority (SFDA), the quality regulator, has made it mandatory
for each rice consignment to be accompanied by a Certificate of Conformity (COC).

It is difficult and expensive to obtain a COC. As a result, it's possible that not all
exporters will be able to comply with the COC certification standards.

MARKET PROFITABILITY

● Production cost for cultivation of basmati rice

According to a research done by (Agri farming), It costs around Rs.27,940 for cultivating
Basmati rice in one acre land. However, slight changes may happen in total cost of
cultivation depending upon various factors like pest incidence, climatic conditions and
other abiotic conditions.
Income returns in 1 acre basmati rice cultivation vary from region to region and market
to market. The farmer can sell quintal Basmati rice at Rs.3,500 at market in Punjab on an
average. A farmer can get 23 quintals of yield on average from one acre basmati rice
field.

This above mentioned detail is selling the basmati rice to an local dealer or an exporter

Let’s see from the exporter perspective. He buys or bargains with the farmer and buys
one quintal of basmati rice for around 3,500 rupees. A quintal is 100 kg. According to
economic times The export price of basmati rice is 1,200 dollars. But the exporter
brought a tonne of basmati rice from farmers for around 470-500 dollars.

The annual report of the Mahavir Rice & Gen. Mills, they had around 8% of profits in
the FY 2021-22. The distribution cost plays a vital role in exporting and also it has a
huge part in overall cost because of that only if they also buy at 500ish dollar after
adding the distributions charge the overall cost of exporting will come around 1,100
 dollar. This indicates that the distribution cost is more or less same as the cost of
cultivation of the basmati rice, in some cases the distribution cost will exceed the cost of
cultivation.

There is no export and import duty for the basmati rice but for other non-basmati rice
they imposed export duty. The price will be fluctuate based on the demand in the
importing country (Saudi Arabia) and the production in the exporting country (India)

MARKETING MIX

PRODUCT:

Basmati rice, which comes from the Hindi word basmati, meaning fragrant, is recognized by its
exceptional, practically flower smell and taste. It has become one of the most well-known sorts
of rice in numerous nations all over the planet because of its quality and reputation as being one
of the finest varieties of aromatic rice available.

Basmati Rice importers in Saudi Arabia prefer only the high quality of Basmati Rice from India.
The Indian Government referenced a few rules and strategies to keep up with the worldwide
standard nature of Basmati Rice. These guidelines and procedures are followed by the Indian
rice exporters. The strategies and cycles are typically normal for practically all nations, just the
specialized terms utilized for commodity and import could be fluctuated. This is finished to
improve the nature of import and to make further exchange for the Rice importers Saudi Arabia
simpler.

PLACE:

Indian brands have in excess of 1121 stores in Saudi, so stores are essential spots for Indian
organizations to sell its items and administrations. Indian organizations have exceptional
strategies to pick store places. Indian stores are constantly situated in jam-packed business
circles with helpful transportation. On one hand, Indians take full advantage of brand impact to
attract more customers. Then again, good transportation causes the objective clients to consume
whenever. In spite of the fact that lease costs are exceptionally high, Indian brands actually
demand that each store is in a good location.

PRICE:

Mostly price of the basmati rice in saudi arabia will be driven by the demand, The food export
analyst predicted that there will be a increase marginal demand in the fiscal year 2023 right now
the export price of basmati rice is $1,200 which is year high compared to the previous year. And
also nex import duty on non-basmati rice will increase the price of non-basmati rice, This will
increase the selling price of non basmati and basmati rice. So the profit margin of the product
will be more than compared to non-basmati rice and older price of basmati.

PROMOTION:

Presently, a major part of Basmati export from India is as mass and in confidential marks
possessed by merchants. Presently, APEDA proposes to embrace a mission for advancement of
commodity Basmati rice in retail load with Indian brands. At first, the mission is proposed to be
embraced in Saudi Arabia and Iran which represent more than 50 % of the total trade. The
promotion activity may consist of in-store promotion, print and electronic media publicizing and
an occasion in the lodging where merchants, media and other opinion makers may be invited.
The focal point of the mission is towards better consumer education and awareness about Indian
Basmati rice.

Developing promotional strategy for Basmati rice overall and in retail loads with Indian Brands
specifically; designing and creation of creatives including handouts, leaflet, panel, poster,
multimedia, banner and other publicity materials for print, electronic and social media, display
advertisements etc. as per final scope of work.
REFERENCE

1. Basmati Rice Cultivation Income, Yield Report :-

https://www.agrifarming.in/basmati-rice-cultivation-income-yield-project-report

2. Import Duty on Rice :-

https://economictimes.indiatimes.com/news/economy/policy/india-imposes-20-export-
duty-on-rice/articleshow/94079363.cms

3. Food Agricultural Service (By USDA) :-

https://www.fas.usda.gov/data/saudi-arabia-grain-and-feed-annual-7

4. About SDFA -
https://www.business-standard.com/article/economy-policy/india-s-rice-exports-hit-as-
saudi-arabia-makes-quality-rules-stringent-119092401288_1.html

5. Basmati Buyers in saudi arabia :-

https://www.volza.com/p/1121-basmati-rice/buyers/buyers-in-saudi-arabia/

6. Indian Basmati exporters :-

https://drdpat.bih.nic.in//Rice%20Export%20-%2014.htm
 Other References

1. https://m.economictimes.com/news/economy/agriculture/indias-basmati-rice-production-
to-be-higher-than-last-years-level-due-to-monsoon-boost/articleshow/77616976.cms

2. https://www.statista.com/statistics/913050/india-distribution-cost-from-component-wise-
economic-cost-of-rice/