“Basmati growers struggle as government keeps export price at $1200 per tonne”
Published on: October 14, 2023.
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Basmati Rice Growers Face Challenges Due to Government Maintained Prices
The troubles for basmati rice growers are surmounting as the Central Government continues to maintain the Minimum Export Price (MEP) on basmati rice at $1,200 per tonne. As a result, there has been a drop in the prices of varieties, Basmati 1509 and 1718, in the market by Rs 300 per quintal both for top-quality as well as slightly lower-quality grain. This has occurred since last Friday.
Farmers are highly discontented with the government’s decision. This plan is seen as an obstacle in favoring the interests of Basmati growers who have been striving to change Punjab’s focus from water-intensive paddy crops to the less water-consuming Basmati variety.
In the past week, the rates have indeed plummeted by 500 to 600 per quintal.
The MEP was imposed by the Centre on Basmati rice on August 25 creating anxiety among exporters in Punjab and Haryana, the largest Basmati rice exporting states. Union Minister Piyush Goyal stated that the MEP might be reduced to $850 per metric tonne.
Nonetheless, on this past Saturday a circular was published by the Department of Food and Public Distribution under the Ministry of Consumer Affairs and Food and Public Distribution stating a continuation of the earlier regulation regarding the Basmati rice till further notice.
In the absence of an official announcement regarding this plan for about three weeks, Basmati rates began to fall as exporters were anticipating an unfavorable government decision.
It’s important to note that Basmati crops are seldom purchased by the government, instead private traders and exporters are the primary buyers. Exporters forecast that the rates will likely continue to decrease in the upcoming days.
The increased MEP led to Indian rice exporters being disadvantaged at two recently held international food fairs as international buyers were more attracted to Pakistan rice.
Diwan Singh Rodala, a farmer from Amritsar, reported a loss in his top-quality Basmati 1509 prices. There was a drop of approximately Rs 650 per quintal compared to the rate at the start of the harvest season in September where it was sold at Rs 3,800 per quintal.
Experts perceive the decline in prices is due to the increase in MEP, adverse weather conditions, bulk arrivals in recent days, and international tensions, particularly the Israel-Palestine conflict.
Exporting industry professionals argue that this costly MEP will inflict further harm to their business.
There is a fear expressed by Vijay Setia, the preceding president of All India Rice Exporters Association, that the government is attempting to ruin Basmati exports from India. He stated that this year all orders are being secured by Pakistan rice suppliers as they have already increased the area for basmati this season.
Setia further elaborated on his concern, adding that around 41 per cent of the expanded Basmati cultivation is devoted to short-duration varieties, which typically earn $700 to $1,000 per metric tonne in the international market.
Around 71.40 per cent of exports from April to July reportedly fell within the price range of $700-1,200 per metric tonne. Basmati was exported in significant amounts, with 4.5 million tonnes exported last year, valued at approximately Rs. 38,000 crore, as stated by Ashok Sethi, the director of the Punjab Rice Millers Export Association.
Unfortunately, the producers would hesitate to buy from farmers as they could not complete the export orders due to the heightened MEP. This could potentially impact farmers negatively, particularly those who have expanded Basmati cultivation in states like Punjab that are prone to flooding.
