“Government contemplates revising minimum export price for basmati rice”
Published on: October 16, 2023.
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Rice Export Pricing Under Review by Government
The Indian government recently confirmed that it is contemplating the reassessment of the minimum export price for basmati rice. The consideration comes amidst industry apprehension that the spike in prices has borne negatively on outward shipments.
Exporters Call for Reduction in Export Rate
Rice exporters have voiced their desire for the export rate to be minimised to about USD 850 per tonne from the current USD 1,200 per tonne. There are indications that the Indian Government decided against allowing basmati rice exports below USD 1,200 per tonne in late August, to avoid probable ‘illegal’ transport of white non-basmati rice under the guise of superior basmati rice.
Government Steps to Manage Rice Supply and Prices
According to a statement by the Ministry of Consumer Affairs, Food & Public Distribution, the Central Government has implemented measures to amplify domestic rice provision and control prices. They emphasized that one such action is the usage of contracts for basmati rice exports worth USD 1200 per tonne and beyond for the issue of Registration – cum – Allocation Certificate (RCAC), effective from August 25th, 2023.
The government revealed it is actively studying the Free On Board (FOB) price of the contract for RCAC issue Rice suppliers, following claims from rice exporters that the high FOB value is negatively impacting basmati rice exports. They affirmed that the current arrangement will proceed until an apt choice is made by the government.
Export Review to Consider International Prices
Official sources disclosed that India exported about 45 million tonnes of basmati rice in the previous fiscal year, and 18 million tonnes in the first half of the current fiscal year. In 2021 and 2022, export costs ranged from USD 850-900 per tonne. However, the price surged to Rs 1050 per tonne before the government’s choice to refrain from registering contracts below USD 1200 in August.
While examining this issue, they admitted that the government will also consider the price at which other Pakistan rice exporting nations are selling basmati rice in global markets.
Rationale for Reassessment
The ministry further explicated that the USD 1,200 per tonne value was implemented as there were reliable field reports of misclassification and prohibited export of non-basmati white rice. Their release added that the new crop of basmati is beginning to arrive, which usually results in a dip in prices; thus, there is a requirement for review.
To maintain rice prices under control, the government has prohibited the exports of broken rice and non-basmati white rice and implemented an export duty on parboiled non-basmati rice.
