Rice exporters and traders have halted grain procurement from local markets from Sunday onwards in the basmati rice-producing regions of Punjab, Haryana, and western Uttar Pradesh.
The action is a response to the government’s decision to maintain the minimum export price (MEP) for basmati rice at a relatively high rate of USD 1,200 per tonne. According to reports in the media, several rice exporters have expressed concerns that, given the existing MEP level, the procurement of basmati paddy would no longer be economically feasible.
It has been noted that Pakistan, a prominent competitor with India in the global rice market, is presently exporting aromatic rice at a substantially lower rate of approximately USD 900 per tonne.
Following a meeting held on Saturday, the All India Rice Exporters Association (AIREA), the leading organisation representing basmati rice exporters, has strongly recommended its members to cease the purchase of paddy in the best interests of the trade.
According to reports, the advisory issued by Nathi Ram Gupta, the President of AIREA, underscores the need for members to exercise utmost caution in procuring and maintaining paddy inventory. It is believed that these actions will have a significant impact on the commercial viability and the potential for basmati rice exports at a profitable level.
Vijay Setia, a former President of AIREA and a basmati rice exporter based in Karnal, has been quoted that they have already ceased the procurement of basmati paddy from farmers. This decision stems from the belief that the current Minimum Export Price (MEP) is set at an exceptionally unrealistic level, making exports at this rate almost unattainable.
The government took a step on 25 August by imposing a ‘temporary’ MEP of USD 1,200 per tonne, effective until 15 October, aimed at curbing the ‘illegal shipment of white non-basmati rice under the guise of premium basmati rice.’
A communication from the Department of Food and Public Distribution on Saturday stated that the current arrangement for registration and allocation certificates for basmati rice may extend beyond 15 October, 2023, pending further directives.
