Basmati paddy procurement halts as key mandis shut down
Published on: October 16, 2023.
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Suspension of Rice Procurement by Traders and Exporters in Response to Rate Maintenance
Rice exporters along with traders made the decision to halt procurement of grain from local markets starting Sunday. This mainly affected the basmati rice-producing regions, specifically Punjab, Haryana, and the western zone of Uttar Pradesh.
The action is stimulated by the Indian government’s decision to maintain the minimum export price (MEP) for basmati rice at a significantly high rate of USD 1,200 per tonne. This rate has led to several concerns among rice exporters stating that procurement at this MEP level is not economically sustainable.
Pakistan, a standout contender in the global rice market with India, is currently exporting aromatic rice at a remarkably low rate of about USD 900 per tonne.
Call for Halt on Paddy Purchases by Leading Rice Exporters Association
The All India Rice Exporters Association (AIREA), the primary body representing basmati rice exporters, has strongly advised its members to stop procurement of paddy in the best interest of the trade following a meeting on Saturday.
Nathi Ram Gupta, AIREA’s president, emphasized the need for members to be cautious in procuring and maintaining paddy inventory in an advisory he issued. Experts believe that these actions would profoundly impact commercial viability and profit potential for basmati rice exports.
Ex-President of AIREA Ceases Procurement Activities
Vijay Setia, a former AIREA president and basmati rice exporter from Karnal, stated that he had already stopped procuring basmati paddy from farmers. This decision arises from the belief that the present MEP is set at an unrealistically high level, rendering exports at this price almost unfeasible.
On August 25, the government instituted a ‘temporary’ MEP of USD 1,200 per tonne to deter ‘illegal shipment of non-basmati white rice disguised as premium basmati rice.’ This law is in effect until October 15.
A communication from the Department of Food and Public Distribution on Saturday revealed that the current registration and allocation certificate arrangement for basmati rice might extend beyond October 15, 2023, contingent on further directives.
