Understanding why Basmati rice export price increased and why the center is reconsidering it
Published on: October 16, 2023.
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Potential Review of Basmati Rice’s Minimum Export Price
The Indian government is currently deliberating on a proposition to revise the minimum export price of basmati rice. Currently, the pricing stands at $1200 per tonne.
The reconsideration follows a series of grievances raised by rice exporters who feel the high cost has impeded exports. They have suggested lowering the price to $850 per tonne.
Backdrop: Reason for Previous Price Surge
Earlier, the price surge was initiated as a safeguard against illegal exports of white non-basmati rice, disguised as the basmati variant. As a result, the authorities decided that the basmati rice should not be sold under $1200 per tonne in the international market.
In line with this strategy, the commerce ministry instructed the trade promotion organization, APEDA, to avoid sanctioning export contracts for anything less than $1200 per tonne on August 27.
Importance of Pricing Review
The Ministry of Consumer Affairs, Food & Public Distribution announced on Sunday that the Central Government has formulated various strategies to ensure rice availability in the domestic market and manage rice prices.
The stipulation that only export contracts for basmati rice valued at $1200 per tonne or above would qualify for Registration-cum-Allocation Certificates (RCAC) has been implemented since August 25, 2023.
This high Free on Board (FOB) value has garnered concerns from rice exporter associations about its negative effect on the export of Indian basmati rice. To address these concerns, Food and Consumer Affairs Minister Piyush Goyal convened a meeting with the rice exporters.
The current measures will remain operational until a favourable conclusion is reached, according to the official statement.
India’s Basmati Rice Export Figures
Last fiscal year, India managed to export approximately 4.5 million tonnes of basmati rice. In the first half of the ongoing fiscal year, the country recorded exports of about 1.8 million tonnes.
The typical export prices of basmati rice fluctuated between $850-$900 per tonne in 2021 and 2022. However, they peaked at around $1050 per tonne earlier this year before the crucial decision on August 25 not to register contracts under $1200 per tonne.
The government reassessment will also consider the prices at which other countries, notably Pakistan, are retailing basmati rice in international markets.
