“Basmati paddy purchases halt by exporters prompts Centre’s MEP review”
Published on: October 15, 2023.
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Despite requests by traders to lower the minimum export price (MEP) of basmati rice to approximately $900 per tonne, India’s Home Minister Amit Shah-led committee has declined to issue its endorsement. On Sunday, India’s Food Ministry disclosed that the appeal by exporters is under “profound analysis”.
“From the meetings with rice exporters, the review of FOB price for issuing of RCAC by APEDA for basmati rice export is under the government’s earnest appraisal,” announced the Food Ministry. In the meantime, the current $1200 per tonne will persist as the benchmark until the government decides on an appropriate intervention.
Regulation by the Commerce Ministry
Since August 28, APEDA, the official body for promoting agricultural exports, has been complying with the Commerce Ministry’s instructions, causing no basmati contracts to be registered below the $1200 MH ban. This step mirrors a MEP but allows for adjustments without undergoing the standard procedure.
“The move was initiated due to credible reports we received about misclassification and unlawful export of non-basmati white broken rice, whose exportation has been forbidden since July 20,” stated the ministry. “The banished rice was allegedly being marketed under the HS code of basmati rice.”
The decision to maintain the MEP was made by a ministerial team and conveyed to the Commerce Ministry and APEDA on October 14.
Basmati Stakeholders Meeting
At a virtual meeting attended by basmati sector stakeholders on September 25, sources opined that Commerce Minister Piyush Goyal agreed to reduce the MEP to $850 per tonne.
Guidance from AIREA
Former president of the All India Rice Exporters Association (AIREA), Vijay Setia, informed Businessline that several rice exporters from Pakistan abstained from purchasing basmati crops after an AIREA advisory was issued on Sunday.
According to an October 14 AIREA advisory to its constituents, “There is a continuation of restrictions on registering Basmati contracts above $1,200/tonne for the issue of RCAC. Given the situation, members are advised to exercise prudence when procuring paddy and managing inventory which could potentially affect business performance and basmati export returns. As a matter of trade interest, members are advised to cease purchase of paddy and rice forthwith.”
It is anticipated that an AIREA representative body will approach the APEDA chairman on Monday to advocate for a reduced MEP.
APEDA’s Data on Basmati Prices
Data from APEDA shows that the average price achieved by basmati rice exporters for the four months of October 2022 to January 2023 was $1,048.82/tonne, $1,016.29/tonne, $998.16/tonne, and $1,045.21/tonne, respectively. It has been noted that the majority of basmati arrivals occurred during this period.
