Basmati paddy purchases halted by exporters as major markets shut down
Published on: October 16, 2023.
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Basmati rice harvesters and rice exporters in Punjab, Haryana, and western Uttar Pradesh halted their acquisitions from the mandis from Sunday. The traders’ protests were prompted by the government’s insistence on maintaining an overly high minimum export price (MEP) of $ 1,200 per tonne.
Conversations with multiple rice exporters from Pakistan revealed that the present MEP would prove unfeasible for basmati rice procurement. They flagged the competitive pricing of Pakistan’s aromatic rice exports, currently standing at roughly $ 900 per tonne.
“Our halt on aromatic rice’s market purchases will primarily affect the farmers,” asserted a rice exporter.
Following the government’s MEP announcement for aromatic rice in August 2023, mandi prices for the short-duration pusa 1509 basmati paddy plummeted from Rs 600 per quintal to Rs 3100 per quintal.
The All India Rice Exporters Association (AIREA) strongly advised their members to avoid further paddy purchases due to trade interests after their meeting last Saturday.
Nathi Ram Gupta, AIREA’s president, issued a warning about the risks involved in procuring and storing paddy for business viability and basmati export potential.
Pakistan rice suppliers have suspended the purchase of basmati paddy from farmers citing the impracticality of exporting at the current MEP rate, according to former AIREA president and Karnal-based exporter, Vijay Setia.
The government imposed a temporary MEP of $1,200 per tonne on basmati rice exports to curb non-basmati white rice ‘illegal shipments disguised as premium basmati rice’ on August 25.
The department of food and public distribution continued the existing procedure for basmati rice registration cum allocation certificate beyond October 15, 2023, until further directives.
Industry insiders revealed that the government agreed to lower the MEP to $850 per tonne after a meeting between rice exporters in Pakistan and commerce and industry minister Piyush Goyal. In the past five years, basmati rice’s average export rate was $975 per tonne, according to AIREA.
Approximately 75% of India’s annual basmati rice exports of 4.5 million tonnes are priced between $700 and $1000 per tonne, the exporters stated.
The commerce ministry reported receiving credible leaks of non-basmati white rice’s misclassified and illegal exports since the ban starting July 20, 2023.
The ministry noted large price fluctuations in the export contracts for basmati, with the lowest recorded price at $359 per tonne against the month’s average export price of $1214 per tonne.
An agricultural and processed food products exports development authority (APEDA) committee in partnership with the agriculture ministry analyzed the significant differences in contract prices for exported basmati in August. They discovered that the lowest price was $359 per tonne, while the average export price was $1,214 per tonne.
India exported 2 million tonnes or $2.2 billion of basmati rice in the April-August period of the ongoing fiscal year, indicating a 12.3% increase in value compared to the previous year. In 2022-23, the country exported 4.56 MT of basmati rice, valued at $ 4.78 billion, with an average price of $1050 per tonne.
Basmati rice, classified by the geographical indication (GI) tag, is cultivated in roughly 70 districts in Punjab, Haryana, western Uttar Pradesh, Jammu & Kashmir, and Uttarakhand. The global market highly values this aromatic and long-grain rice. India possesses a 75%-80% share of the global aromatic rice market.
