MEP disrupts basmati rice exports, India fast losing market share

By Sandip Das

Not just fresh basmati rice shipments, but execution and payment settlements for even exports contracted earlier are hit by the minimum export price (MEP), traders say.

The $1200/tonne MP, to be effective till October 15, was announced a fortnight ago.

Exporters FE spoke to said that the government should reverse the decision at the earliest as the MEP is “at an unrealistic level.” India is already losing share in the global aromatic rice market that has been built over the years, they added.  

“Buyers of a supplied partial shipments are asking for the balance shipment and payments are being delayed,” Vijay Setia, former president, All India Rice Exporters Association (AIREA) and a Karnal based leading exporter of rice, told FE

Setia said since the end consumers in most of the markets will not adapt immediately to such high prices and other countries might capture the whole market for this year.

Another exporter requesting anonymity 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 400/quintal less than Rs 3800/quintal prevailed a year back.

According to an official with the AIREA , the average export price of basmati rice in the last five years has been $ 975/tonne.

In 2022-23, the country exported 4.56 million tonne (MT) of basmati rice valued at $ 4.78 billion with an average price of $ 1050/tonne. India has around 80% share in the global trade of basmati rice.

A committee is currently set up by Agricultural and Processed Food Products Exports Development Authority (APEDA) in collaboration with the agriculture ministry to look at various aspects of Basmati rice exports.

Trade sources said the committee had a meeting with rice exporters last week and it would be meeting officials of key basmati rice growing states of Punjab, Haryana and western Uttar Pradesh soon before submitting the report by the end of the month.

Just after the imposition of 20% export duty on parboiled rice, the government has halted all basmati rice shipments below $ 1200/tonne till October 15 two weeks back.

The commerce ministry officials had stated that there was 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.”

Geographical Indication (GI) tagged Basmati rice is grown in 70 odd districts in Punjab, Haryana, western Uttar Pradesh, 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.

This article has been republished from The Financial Express.

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