Basmati rice exports fall sharply after MEP fiat

By Sandip Das

Exports of high-value basmati rice have slowed down sharply, after the government recently imposed the minimum exports price (MEP) of $1,200 per tonne till October 15. Officials sources told FE that only a fraction of the consignment above the prescribed MEP is currently being cleared for shipment by the Agricultural and Processed Food Products Exports Development Authority (APEDA).

A committee is currently set up by APEDA to look into large variations in the contract price of basmati exported last month with the lowest price being $359/tonne against the average export price of $1,214/tonne. The MEP temporarily was imposed also to restrict “illegal shipment of white non-basmati rise in the garb of premium basmati rice.”

Several rice exporters said that about 75% of India’s 4.5 million tonne of basmati rice exports annually are shipped at an average value in the range of $ 700 – $ 1000 a tonne.

“If the decision to impose a high MEP of $ 1200/tonne is not reversed soon, it would hit domestic paddy prices,” Vijay Setia, former president, All India Rice Exporters Association (AIREA) and a Karnal based leading exporter of rice, said.

Setia said by the end of this month, mandis arrivals of basmati rice is expected to reach its peak and prices of early maturity Pusa Basmati 1509 paddy currently are ruling atleast Rs 500/quintal less than Rs 3800/quintal prevailed a year back.
Another leading exporter of basmati rice said that there will be severe disruption in global supplies as India has 80% share in the global basmati rice trade of 5.5 million tonne (MT).

“Pakistan exports around 1 MT of Basmati and importers largely depend on India for sourcing aromatic long grain rice,” a leading exporter said. In the previous fiscal, the country exported 4.56 MT of basmati rice valued at $ 4.78 billion with an average price of $1,050/tonne.

According to an official with the AIREA, the average export price of basmati rice in the last five years has been $ 975/tonne.
Geographical Indication (GI) tagged Basmati rice is grown in 70 odd districts in Punjab, Haryana, western Uttar Pradesh, Rajasthan, Jammu & Kashmir and Uttarakhand. The aromatic and long grain rice commands a premium in the global market.

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

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

Paddy transplanting is largely complete and, at present, up 3.7% year-on-year (y-o-y). While rice has been transplanted on 39.8 million hectare so far or about 98% of the normal sown area, the standing crop has been impacted by floods in several areas in Punjab and deficiency in rainfall in eastern regions.

This article has been republished from The Financial Express

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