government cuts export floor price for basmati rice
Published on: October 24, 2023.
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The Indian government has made the decision to reduce the minimum export price (MEP) for basmati rice after complaints from traders that overseas shipments had become unprofitable. India is a major exporter of this premium aromatic grain, with annual shipments exceeding 4 million tonnes. The MEP, originally set at $1200 per tonne in August to stabilize domestic prices, has now been approved to be reduced to $950 per tonne.
The extension of export restrictions on basmati rice on October 14 sparked protests from farmers and exporters who argued that the high floor price made Indian consignments uncompetitive. They pointed out that India was losing global markets to Pakistan, another producer of the premium rice variety. In response to these concerns, Food Minister Piyush Goyal consulted with traders and assured them that the government would review the MEP.
Food Secretary Sanjeev Chopra confirmed on October 19 that the government was actively reviewing the MEP and would announce a decision at an appropriate time. In the meantime, the current arrangement would continue. India’s basmati rice exports, worth over $4.79 billion in 2022-2023, are mainly destined for the Middle East and the US. However, shipments slowed down significantly after the MEP was implemented in August.
The All-India Rice Exporters Association issued an advisory earlier this month, recommending its members to halt procurement of basmati rice in protest of the high MEP. The government had introduced the curbs on basmati rice exports in order to prevent the export of non-basmati rice using basmati-specific export codes and provisions.
The Indian government has been focusing on bolstering domestic food stocks due to concerns about food output after a deficient monsoon. Cereal inflation has remained in the double digits for over a year, with a nearly 11% increase in September alone, according to official data.
Overall, this decision to reduce the MEP for basmati rice is expected to make Indian consignments more competitive in the global market. It will benefit both farmers and exporters and ensure the continued success of India’s basmati rice industry.
Source: [Hindustan Times](https://www.hindustantimes.com)
