Improvement in Basmati Rice Prices After MEP Eases and Low Output Worry
Published on: November 7, 2023.
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Prices of basmati paddy have increased following the reduction of the minimum export price (MEP), allowing for the resumption of exports. This comes as concerns arise over a lower than expected crop in 2023-24. While the improved prices benefit farmers, reports of a drop in production raise concerns for them. In certain mandis, trading was stalled as exporters ceased purchasing from farmers.
The decision to cut the MEP has proven to be beneficial for exporters, the government, and farmers. With exports restarting and basmati prices returning to their original range of Rs 38-40 per kg from Rs 30-32 per kg, the cut has had multiple positive outcomes. Additionally, the government has ensured that only high-value basmati rice is exported. The price of some basmati varieties has risen from Rs 3,300-3,400 per quintal to over Rs 4,000 per quintal after the MEP was reduced from $1,200 per tonne.
India exports more than half of its estimated 8-9 million tonnes of basmati rice annually. In FY23, India exported around 17.8 million tonnes of non-basmati rice and 4.6 million tonnes of basmati rice. Among the non-basmati rice exports, 7.8-8 million tonnes consisted of parboiled rice.
El Nino-induced drop in production has led to a substantial increase in rice prices globally, with Asian countries being severely affected. The Indian government has indicated its intention to reduce the MEP by accepting basmati consignments priced below $1,200 per tonne.
The Union commerce ministry has communicated its decision to revise the price limit for the export of basmati rice from $1,200 per tonne to $950 per tonne. Initially, the government had restricted exports of basmati rice below $1,200 per tonne to prevent the possibility of “illegal” shipments of non-basmati rice disguised as premium basmati rice. Although the notification was extended on October 15, the government has stated that the review of the MEP is under active consideration.
Farmers have expressed anger towards the extension of the MEP, leading to some exporters refraining from purchasing new basmati from farmers. Consequently, the open-market prices of basmati have decreased by Rs 300-400 per quintal since the extension of the MEP.
Source: [Source](https://www.business-standard.com)
