Government Plans to Lower Minimum Export Price on Basmati Rice to $950/tonne
Published on: October 25, 2023.
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The government has made the decision to lower the minimum export price (MEP) for basmati rice shipments from $1,200/tonne to $950/tonne, according to a senior official. The Agricultural and Processed Food Products Development Authority (APEDA) will soon issue a formal notification allowing exporters to register for shipments above the new threshold. This decision to reduce the MEP was relayed to exporters by the commerce and industry ministry in a meeting on Monday.
The lowering of the MEP is expected to increase export realization and boost the income of farmers. Vijay Setia, a former president of the All Indian Rice Exporters Association (AIREA) and a rice exporter based in Karnal, stated that allowing basmati rice exports above $950/tonne is a positive development for the industry.
The imposition of a temporary MEP of $1,200/tonne on basmati rice shipments was put in place in August and was originally set to be in effect until October 15. This temporary MEP was extended indefinitely, causing exporters to halt the procurement of basmati paddy out of concern that high MEP would slow down exports. The move was intended to prevent the illegal export of white non-basmati rice disguised as premium basmati rice.
The advisory from Nathi Ram Gupta, the president of AIREA, warned members to be cautious in the procurement and inventory holding of paddy due to the potential impact on business viability and the potential of basmati rice exports.
The commerce ministry received reports of misclassification and illegal exports of non-basmati white rice, which had been banned since July 20, 2023. The AIREA reported that the average export price of basmati rice over the past five years has been $975/tonne.
In the April-August period of the current fiscal year, India exported 2.1 million tonnes (MT) of basmati rice valued at $2.22 billion, a 12.6% increase in value compared to the same period 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 $1,050/tonne.
To address the large variations in the contract price of basmati rice exported in August, APEDA collaborated with the agriculture ministry to form a committee. The committee’s report recommended a substantial reduction in the MEP to alleviate export hindrances.
Basmati rice with a Geographical Indication (GI) tag is grown in around 70 districts in Punjab, Haryana, western Uttar Pradesh, Jammu & Kashmir, and Uttarakhand. This aromatic and long-grain rice is highly sought-after in the global market, with India accounting for approximately 75%-80% of the global aromatic rice market. Pakistan holds a share of around 20% in basmati rice exports.
Source: [Financial Express](https://www.financialexpress.com)
