Sharp rises in the price of basmati rice are threatening to have a huge impact on Indian restaurants in Britain, with the curry house staple coming under pressure from soaring costs and panic buying.

British importers of the Himalayan rice expect that prices will increase even further as stocks fail to meet soaring demand for the product. Once an exotic food, consumed in Britain only by Asian communities, basmati is now the dominant rice product in the UK, accounting for half of the rice consumed in Britain.

The wholesale price of basmati has doubled in the past year, because of a weak harvest and rampaging demand for the prized aromatic long-grain rice grown only in northern India and Pakistan. Tilda, the biggest British importer, thinks the price needs to go up by a third to cover rising costs for paddy farmers and increasing shipping costs.

Jonathan Calland, an executive of Tilda, said: “We are looking at further price increases.” After a weak harvest and a big price increase last year, the company had hoped for a recovery in supply.

Mr Calland said: “With a price increase of 55 per cent in March, one would have anticipated more basmati would be sown, but we saw a small reduction.” A kilo of basmati currently retails in Britain for between £2.50 and £3.00 and Mr Calland thinks it probably needs to rise to £3.35 per kilo to meet wholesale and shipping costs.

Basmati is quickly gaining the cachet of a luxury food in a world afflicted with droughts, dwindling grain stocks and panic buying of grain by government agencies. “In the UK, we never used to eat basmati,” Mr Calland says. “People’s tastes have changed due to the popularity of Indian food.”

The surge in the cost is creating friction in the Asian catering sector.

Stories abound within the curry restaurant trade of establishments that use lower-quality grains to make Pulao rice instead of basmati, the traditional ingredient.

Unscrupulous wholesalers are also accused of mixing basmati with broken rice and low-grade alternatives. Top-quality Himalayan grain costs between two and three times as much as typical American long-grain rice. Attempts to grow the aromatic Himalayan rice strain in Italy and other rice-growing regions have failed to produce an acceptable product. Yet the huge demand for basmati from overseas is not putting more rice in the pot.

Mr Calland points to shrinking wholesale stocks and a 10 to 15 per cent decline in basmati output. In India, the wholesale price has leapt from about rupees 1,100 (£13.85) per 100kg to rupees 2,000 in just over a year, but even these massive gains have not proved enough of an incentive for Indian farmers to plant more rice, Mr Calland says.

The cultivation of basmati is very labour intensive and yields between one and two tonnes per hectare, compared with six tonnes for rival grains. Wheat has also doubled in price and farmers are switching to higher-yielding and more profitable crops. Meanwhile, concern about food security means that less rice is available to world markets.

Fearing that a decline in global stocks of grain would trigger vicious food price inflation, the Indian Government has imposed export restrictions on nonbasmati rice. The reduction in export rice volumes has given a further boost to basmati and created rice shortages in the Gulf, where Indian and Pakistani rice are consumer staples.

In an attempt to curb food price escalation, the government of the United Arab Emirates has imposed a cap on the price of rice, only to see importers withdraw the products from supermarket shelves.

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