Sources suggest that India is expected to reduce the minimum export price of basmati rice
Published on: October 24, 2023.
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India to Cut Floor Price for Basmati Rice Exports, Easing Trade Concerns
New Delhi, October 24: In a move to address concerns raised by farmers and exporters, the Indian government is expected to reduce the minimum export price (MEP) for basmati rice, according to government and industry sources. The floor price, currently set at $1,200 per metric ton, is likely to be decreased to $950 per metric ton. Although the decision has not yet been announced publicly, insiders believe that the reduction will help revive trade in basmati rice.
The MEP of $1,200 per ton was implemented in August with the intention of stabilizing local prices before important state elections. However, the arrival of the new season harvests led to a drop in domestic prices, prompting farmers and exporters to express displeasure. Despite expectations of a decrease after the harvests, the government announced on October 14 that it would maintain the MEP until further notice. This move caused frustration among farmers and exporters.
Recognizing the impact of the MEP on trade, authorities have stated that they are actively reviewing the policy. The decision to lower the MEP would benefit both farmers and exporters who have been negatively affected by the $1,200 MEP, according to Prem Garg, president of the Indian Rice Exporters Federation. Garg stated that the high MEP had discouraged exporters from purchasing rice from farmers.
Basmati rice is predominantly exported by India and Pakistan. India alone exports over 4 million metric tons of this premium long-grain rice, known for its unique aroma, to countries like Iran, Iraq, Yemen, Saudi Arabia, the United Arab Emirates, and the United States. The expected reduction in the MEP is anticipated to revive trade in basmati rice, providing relief to farmers and exporters.
Vijay Setia, a prominent exporter from the state of Haryana, believes that the lower MEP will enable the resumption of basmati rice trade. As the world’s largest rice exporter, India has also imposed limitations on the export of non-basmati rice varieties.
Conclusion
The Indian government’s expected decision to reduce the floor price for basmati rice exports is a positive development for farmers and exporters. The high MEP had negatively impacted trade, leading to discontent among stakeholders. With the reduction, trade is likely to resume, benefiting both farmers and exporters. India, as the largest exporter of rice, maintains an important position in the global rice market, and the lowered MEP will ensure the continued growth of this sector.
Source: Reuters
