Global Rice News

India’s Decision to Maintain Basmati Rice Export Floor Price Raises Concerns for Pakistani Rice Exporters

India’s recent decision to keep the floor price for basmati rice exports unchanged is causing concerns among rice exporters in Pakistan. This move has intensified the competition in the basmati rice market between these two countries.

Both India and Pakistan are the exclusive producers of basmati rice, with India exporting over 4 million metric tons of this premium long-grain rice to various countries.

In August, the Indian government set a Minimum Export Price (MEP) of $1,200 per ton for basmati rice. Initially, it was expected that this price would be revised downwards, but recently, the Indian government announced its decision to maintain the current floor price until further notice.

This fixed floor price has left basmati rice farmers in Pakistan worried about potential losses. The planting of summer-sown rice varieties takes place in June and July, with harvesting starting in October. During this time, prices typically decline as the new harvest enters the market.

Farmers, millers, and exporters in Pakistan had hoped for a reduction in the MEP, as they consider it to be too high. A leading exporter from the state of Haryana, one of India’s primary grain-producing regions, has called for an immediate reconsideration, suggesting a range of $850-$900 per ton for the MEP.

The inability to sell their rice at competitive prices has created a challenging situation for basmati rice farmers in Pakistan. Traders report that prices of basmati rice varieties have fallen by over 20 percent since the introduction of the MEP.

It is worth noting that basmati rice is not widely consumed within India, and the government does not purchase this variety for state reserves. This has raised concerns within the industry that Pakistan may gain a competitive edge in the basmati rice market.

Meanwhile, the international rice market is experiencing turbulence due to India’s consideration of a ban on non-basmati rice exports. This uncertainty has resulted in increased demand for Pakistani rice, leading to higher prices. International buyers are now turning to Pakistan to meet their non-basmati rice requirements.

Rice exporters see this as an opportunity for Pakistan to capture essential markets. With the potential decrease in rice supply from India, prices for Pakistani non-basmati rice have surged by over 20 percent, or at least $100 per ton. As Pakistan’s fresh crop is nearing harvest, growers are raising prices due to the uncertain global situation.

They believe that with proper government support, Pakistan’s rice exports could increase by $1 billion, boosting the sector’s total export value to around $4 billion.

However, one potential downside of the surge in non-basmati rice exports is the possibility of a price hike in the local market. Exporters believe that basmati rice prices may not see the same increase as non-basmati rice because India continues to export its high-quality basmati rice without any disruptions.

Source: [Profit Pakistan](https://profit.pakistantoday.com.pk)