Global Rice News

Government Decision Disheartens Basmati Rice Growers

The Central Government’s choice to set the Minimum Export Price (MEP) of Basmati rice at $1,200 per tonne is ruffling feathers amongst rice growers. The confirmation of this decision was announced on Saturday causing profound disappointment amongst farmers.

The MEP decision led to a steep price drop of Basmati 1509 and 1718 varieties by Rs 300 per quintal. These are currently the most prominent grain types in the market. Both top-quality and slightly lower-quality grain were affected by this decline since Friday.

Based on the farmers’ perspective, the government’s action undermines the interests of Basmati rice cultivators. These farmers have been pivotal in Punjab’s agricultural evolution from water-intensive paddy crops towards the short-duration Basmati variety.

Rice Price Decline Continues

In addition to the recent MEP decision, prices have been decreasing by 500 to 600 per quintal over the past week.

Exporters from Punjab and Haryana, top rice exporting states, were anxious when the Centre imposed the MEP on Basmati rice on August 25. As a response, Union Minister Piyush Goyal hinted at a lower MEP of $850 per metric tonne on September 25.

However, a circular was issued on Saturday by the Department of Food and Public Distribution under the Ministry of Consumer Affairs and Food and Public Distribution. The circular stated that the arrangement from August 25 would be extended beyond October 15, causing the prices to start plummeting on Friday. The fall came as exporters dreaded an unfavorable government enactment.

Notably, Basmati crops are not acquired by the government but by private traders and exporters. Exporters forecast that the rates will continue to decrease in the forthcoming days.

Indian Exporters Lose Ground to Pakistani Rice Exporters

Due to the high MEP, Indian exporters returned without sales from recent international food fairs. Their absence gave an opportunity to Pakistan rice exporters to fill the void.

For instance, a farmer named Diwan Singh Rodala from Amritsar disclosed that he sold his high-quality Basmati 1509 for Rs. 3,150 per quintal. This rate is Rs 650 less per quintal compared to the initial price at the onset of the harvest season in September when it was selling for Rs 3,800 per quintal.

Factors Impacting Basmati Rice Prices

The falling prices of Basmati rice can be attributed to increased MEP, adverse weather, heavy arrivals in recent days, and international geopolitical tensions—most notably the Israel-Palestine conflict.

The high MEP is predicted to harm the industry even further. Vijay Setia, former president of All India Rice Exporters Association, criticizes that the government is on a mission to obliterate Basmati exports. According to him, all orders are being seized by Pakistan, which has already escalated Basmati production this season.

Rice Exporters Facing Challenges

Setia highlights that the government is aware of how Indian exporters returned from two international food fairs without clinching a single export deal. Despite the global demand for Indian Basmati, high MEP has been an obstacle in securing orders.

About 41% of expanded Basmati cultivation is committed to short-duration varieties. These typically garner $700 to $1,000 per metric tonne in the global market. The total export of Indian Basmati rice last year stood at 4.5 million tonnes, amounting to approximately Rs. 38,000 crore.

However, with the majority of Basmati rice in India being produced for export, only 2-3% of it is consumed domestically. The high MEP is discouraging traders from buying from farmers as the execution of export orders is hampered.

Source: Indian Express