Government Lowers Floor Price for Basmati Rice Exports to $950 per Tonne
Published on: October 27, 2023.
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The government of India has decided to lower the floor price for basmati rice exports from $1,200 per tonne to $950 per tonne. This decision comes after concerns were raised that the higher prices were negatively impacting the country’s outward shipments of basmati rice. The Ministry of Commerce communicated this change in price to the Agricultural and Processed Food Products Export Development Authority (APEDA).
Initially, on August 27, the government had banned exports of basmati rice below $1,200 per tonne to prevent the possible smuggling of white non-basmati rice disguised as premium basmati rice. This ban was later extended indefinitely on October 15, but the next day, the ministry released a statement stating that the review of the Minimum Export Price (MEP) of $1,200 per tonne was still under consideration.
Following the extension of the MEP, reports emerged that some exporters had stopped purchasing new basmati rice from farmers, leading to a decline in open market prices by Rs 300-400 per quintal. The exporters were demanding a reduction in the MEP to $900-1,000 per tonne to improve overseas sales.
However, there were arguments made by a section of exporters and officials in favor of the high MEP. They claimed that the current FOB export price of Indian basmati rice, assuming a procurement price of around Rs 3,835 per quintal, amounted to approximately $1,170 per tonne. The MEP, at just $30 per tonne higher than the FOB price, was seen as a nominal increase in purchase price for international customers.
Atul Garg, the managing director of GRM Overseas, expressed his support for the government’s decision, stating that it would reinstate the competitiveness of Indian basmati rice in global markets. He believed that this reduction in the MEP would make Indian premium quality basmati rice attractive once again. Exporters are now working towards regaining lost ground, and there are signs that the buying cycle is gaining momentum.
In the fiscal year 2022-2023, India exported approximately 17.8 million tonnes of non-basmati rice and 4.6 million tonnes of basmati rice. Of the non-basmati rice exports, around 7.8-8 million tonnes consisted of parboiled rice. Globally, rice prices have increased due to an expected decrease in production caused by El Niño, with rice production in Asian countries being significantly affected.
Source: [Business Standard](https://www.business-standard.com)
