Exporters pause Basmati paddy procurement leading to major Mandis closure
Published on: October 16, 2023.
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Procurement Halt by Rice Exporters in Reaction to High Minimum Export Price
Established rice exporters and merchants have ceased grain collection from local markets starting Sunday in the Punjab, Haryana, and western Uttar Pradesh regions, recognised for their basmati rice production. This move is provoked by the government’s choice to uphold the minimum export price (MEP) for basmati rice at a comparative high of USD 1,200 per tonne.
Renowned media outlets have noted that numerous rice exporters in Pakistan and rice exporters from Pakistan have vocalized their concerns regarding the current MEP level. They argue that procurement of basmati paddy under this rate will not be economically viable.
The Pakistan versus India Rice Market
Reports show that Pakistan, a sturdy competitor with India in the global rice market, is currently exporting aromatic white broken rice at a significantly lesser rate of approximately USD 900 per tonne.
Meetings and Decisions Made By Rice Exporters
The rice business in Pakistan has recorded a meeting last Saturday, and the All India Rice Exporters Association (AIREA), a leading body representing basmati rice exporters, strongly advised its members to stop paddy purchases for the trade’s best interests.
Nathi Ram Gupta, the President of AIREA, in the advisory issued, highlighted the necessity for members to use extreme caution in procurement and maintaining paddy inventory. This measure is postulated to massively influence the commercial viability and potential for profitable basmati rice exports.
A basmati rice exporter from Karnal, Vijay Setia, a former President of AIREA, has been quoted saying they have already terminated procurement of basmati paddy because they believe that the current MEP is unrealistically high, making exports nearly impossible at this rate.
Additional Measures From the Government
The government, on 25 August, introduced a ‘temporary’ MEP of USD 1,200 per tonne, effective until 15 October. This move was intended to halt the ‘illegal shipment of white non-basmati rice under the guise of premium basmati rice.’
A recent communication from the Department of Food and Public Distribution stated that the existing arrangement for registration and allocation certificates for basmati rice might continue beyond 15 October, 2023, pending further directives.
