Potential losses for India’s basmati rice farmers as export suffers due to increased floor price
Published on: October 16, 2023.
Filed under:
Indian Floor Price Maintained for Basmati Rice Exports
News from New Delhi reveals that the minimum export price (MEP) for basmati rice has been sustained at $1,200 a ton since August, a decision that could negatively impact overseas sales of this elite variety. This could potentially affect farmer revenue and result in large stockpiles of the new-season variety of this aromatic long-grain rice, according to farmers and rice mill operators in Pakistan.
Exports from India and Pakistan
India and Pakistan are the sole producers of basmati rice. India exports over 4 million metric tons of this product to countries including Saudi Arabia, the United Arab Emirates, United States, Iran, Iraq, and Yemen. The expectation was a decrease in this MEP, however, on Saturday, the Indian government declared it would keep the floor price intact in the foreseeable future.
As the biggest rice exporter globally, India has also cut non-basmati rice exports in a bid to control domestic prices during state elections.
Impending Losses for Farmers
Local farmer, Sukrampal Beniwal expresses alarm at the emerging financial losses. “We’ve harvested our crop, but there are no buyers,” he laments. Farmers typically sow summer-rice types during June and July, and as the new harvest starts coming in from October, prices generally fall.
Impact on Millers and Exporters
Millers and rice exporters in Pakistan are similarly afflicted. They anticipated the Indian government would reduce the MEP, seen as excessively high, with incoming new-season crops. A prominent exporter from Haryana, Vijay Setia, states that the present MEP is a blow to their industry, urging an immediate reduction to $850-$900 a ton.
Basmati rice farmers are facing difficulties in selling their products as mill operators and traders are avoiding purchasing from wholesale markets, according to Beniwal. Paddy prices of Basmati varieties have declined by over 20% since the government initiated the MEP.
The Future of Basmati Rice
Basmati rice is not commonly consumed in India, and its government does not buy the variety to augment state reserves. According to a leading exporter who chose to remain anonymous, this puts farmers in a tough situation.
“We’re enabling Pakistan to take over the basmati rice market shortly,” he said, regarding the decision to maintain the MEP despite its detrimental effects on farmers and the rice industry in India.
