“Government retains MEP at $1,200 a tonne, prompting basmati rice exporters to stop buying”
Published on: October 16, 2023.
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Effects of High MEP on Basmati Rice Exports in India
Rice exporters in India have ceased procuring Basmati rice from wholesale markets, especially in Haryana and select mandis in Punjab, following the directive of the government to retain the minimum export price (MEP) at $1,200 per tonne.
Specifically, over 40 mandis in Haryana were reported to have shutdown for Basmati transactions last Sunday. Commission agents advised farmers connected with them to wait before taking their produce to the mandis until rice exporters recommence their acquisitions.
Drop in Basmati Prices
Basmati varieties 1509 and 1718 have experienced a price decrease of Rs 300 per quintal for superlative and slightly substandard grains since the past week.
“The decision of the Indian government to set the MEP for all Basmati rice varieties at $1,200 per tonne led to a halt of rice exports from India. Several district mandis presidents were advised to instruct farmers to hold off bringing their fine rice to the mandis, as a result of rice exporters ceasing their Basmati procurement in protest against the government’s decision,” said Ashok Gupta, the head of Haryana Anaj Mandi Arhtiya Association.
A Continuing Saga of Restraints
Nathi Ram Gupta, the president of the All India Exporters Association (AIREA) voiced concerns over continued restrictions, highlighting that Basmati contracts should only be registered for prices above $1,200. Owing to the impact on commercial viability and Basmati exports, AIREA members are recommended to exercise discretion in their paddy procurement and inventory holding.
AIREA officials emphasized the potential negative influence of continued conflicts in West Asia on markets, trade routes, carrier costs, and financial flows. They urged members to halt paddy and rice purchasing immediately for trade stability.
The Impact on Rice Exporters and Farmers
Vijay Setia, ex-president of the All India Rice Exporters Association, noted that the scenario is getting progressively worse in all mandi yards across northern India, with exporters and millers unable to afford Basmati and thereby ceasing purchases.
“With Basmati exports worth Rs 48,000 crores from the country, credit goes to two brilliant IAS officers who stood firm against controversial governmental decisions to benefit farmers and the export industry,” extolled Setia.
Impacts on Farmers
Farmers are also bearing the brunt of the stunted Basmati acquisitions. In Ludhiana’s Khanna mandis, a mere 8,000 tonnes were procured, compared to the 6.3 lakh tonnes of Basmati normally purchased, with a predicted arrival of 25-26 lakh tonnes this season.
The Indian government’s decision to impose the high MEP for Basmati rice on August 25 stirred worries among exporters in Punjab and Haryana, the main Basmati rice-exporting states. Union minister Piyush Goyal proposed a decreased MEP of $850 per metric tonne on September 25.
High MEP Leads to Exporters Returning Empty-Handed
However, on Saturday, the Department of Food and Public Distribution extended the registration-cum-allocation certificate for Basmati rice beyond October 15 until further notice, while keeping the high MEP. This resulted in rice exporters in India returning empty-handed from two recent international food fairs, as international purchasers instead turned towards Pakistan rice suppliers.
Over 70% of India’s Basmati rice exports are within the price range of $700 to $1,200, making the high MEP a significant hurdle.
