Industry seeks no extension of limits on basmati exports

By Sandip Das

After temporarily halting basmati rice exports below $1,200/tonne, the government should refrain from continuing with a minimum export price (MEP) beyond October 15, as it would hit procurement of the next season’s crop, exporters said. 

Several exporters FE spoke to said basmati exports prices usually go up during August-September, considered as the end of the season and the harvesting of the crop for the next season (2023-24) commences from October 1.

“The government needs to reduce MEP to a realistic level of $850/tonne so that farmers prices realisation are not hit because of decline in exports,” Vijay Setia, ex-chairman, All India Rice Exporters Association (AIREA) and Karnal-based basmati rice exporter told FE.

Basmati rice is grown mostly in Punjab, Haryana, western Uttar Pradesh, Rajasthan, Jammu and Kashmir and Uttarakhand. The aromatic and long grain rice commands a premium in the global market. Out of the annual estimated production of 9 million tonne (MT) of basmati rice, half of the volume is exported.

In the previous fiscal, the country exported 4.56 million tonne (MT) of basmati rice valued at $4.78 billion with an average price of $1,050/tonne. According to an official with AIREA, the average export price of basmati rice in the last five years has been $975/tonne.

“MEP fixed for the basmati rice is valid for a few premium rice varieties, it has to be corrected so that shipment of aromatic long grain rice is not hit,” Ashwini Kumar Arora, MD & CEO, LT foods, a major exporter of basmati rice said.

The reason for putting in place MEP for basmati rice and imposing an export duty on parboiled rice until mid- October, officials said, would give the government time to get an estimate of the kharif rice output for 2023-24.

Meanwhile, shares of companies engaged in rice exports – Chaman Lal Setia Exports, LT Foods, KRBL, and GRM Overseas dropped up to 6% in Monday’s intra-day trade.

Pointing out that the average export price of basmati rice in August has been above $1,200/tonne, a commerce ministry official said, “There has been large variation in the contract price of basmati being exported with lowest contract price being $359/tonne in backdrop of average export price of $ 1,214/tonne during the current month.”

The decision to temporarily impose an MEP on shipments of aromatic rice followed reports that non-basmati rice consignments had been sent under the ‘basmati’ and ‘parboiled’ rice category after the ban on white rice shipments last month.

The official had stated that the commerce ministry had received credible field reports regarding misclassification and illegal export of non-basmati white rice whose shipment was banned from July 20, 2023.

Retail rice prices rose by 12.96% in July and had been rising in double digits since the beginning of the year.

The government last Friday imposed a 20% export duty on parboiled rice, a move that comes after non-basmati white rice shipment was banned last month.

India has been the world’s largest exporter of rice since 2012 and currently has more than 40% share in global rice trade. It ships rice to more than 100 countries.

This article has been republished from The Financial Express

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