Exporters warned that the decision – announced in a circular issued on Saturday – will help Pakistan to eat into India’s share in global markets as the neighbouring nation has already brought down MEP of the long-grained aromatic rice to $1,050 per tonne, and said they will stop buying basmati rice from farmers.
“Current MEP of $1,200 per tonne (₹100/kg) is comparatively higher than the average export price of $950 tonne (₹80/kg),” said Suraj Agarwal, CEO of RiceVilla, a rice marketing and exporting company. “The new crop of basmati, which is known as the 1509 variety, has started to arrive and if we don’t book export orders at this point, our only competitor in basmati rice, Pakistan…would improve their share in the global markets,” he said.
All India Rice Exporters Association (AIREA), an apex body of rice exporters in the country, has advised its members to exercise extreme caution in procurement and inventory holding of basmati paddy, saying the government’s decision to retain MEP at $1,200 per tonne till further order is likely to significantly impact their business viability and potential of basmati export at remuneration realisation.
“In the interest of the trade, members may discontinue/stop buying paddy and rice with immediate effect,” Nathiram Gupta, president of AIREA, said in a statement. “Trade members need to also factor in instability induced by the ongoing conflict in West Asia and its present and imminent cascading effects on the buyer (markets), trade routes, carrier costs, and money flow,” he added.
If they stop buying, it will impact basmati farmers.
On August 25, the government had prohibited the exports of basmati rice below the price of $1,200 per tonne to prevent potential instances of “illicit” shipment of regular white non-basmati rice disguised as high-quality basmati rice. It had also kept the sub-$1,200 per tonne rice contracts in abeyance and asked Agricultural and Processed Food Products Export Development Authority (Apeda) to set up a committee to evaluate and study it.
There was a meeting of the committee on September 25 with the exporters where Union commerce minister Piyush Goyal was present. There, the exporters got the impression that the MEP for basmati will be reduced to $850-900 per tonne, according to Vijay Setia, former president of AIREA.
However, to their surprise, the consumer affairs, food and public distribution ministry issued a circular to continue with the MEP of $1,200 per tonne, said Setia who was present at the meeting with Goyal.
Of the total acreage of 17 lakh hectares under basmati rice, the 1509 variety approximately accounts for 40% of the area. Overall exports of basmati rice in FY23 stood at 4.5 million valued at ₹38,524.11 crore in FY23, with Gulf nations being the major buyers.
