In recent weeks, the price of basmati paddy has experienced an upswing, a welcome change from the lows it had previously witnessed. This positive shift can be attributed to the relaxation of the minimum export price (MEP) for basmati rice, which has paved the way for the resumption of exports. However, concerns loom over the 2023-24 crop, which is expected to be below par.
India’s Basmati Production and Exports
India boasts an estimated basmati production of 8-9 million tonnes, with over half of this output being exported annually. Basmati rice is celebrated globally for its aromatic and long-grain qualities, making it a prized commodity in the international market.
Diwali Diyas for Farmers
The recent improvement in basmati rice prices is a ray of hope for farmers who had borne the brunt of falling prices due to the high MEP. Reports of a drop in production have put them on edge, but the easing of MEP restrictions has provided some relief.
Exporters’ Delight
Exporters, government authorities, and farmers alike are celebrating the decision to reduce the MEP, as it has proven to be a win-win situation. The reduction in MEP has revitalized basmati rice exports, which had come to a halt due to its previous high pricing.
A Win-Win Situation
Vijay Setia, former president of the Rice Exporters Association of India, highlighted the positive impact of reducing the MEP. He stated, “The decision to cut the MEP has been a win-win for exporters, the government, and farmers.” On one hand, exports have resumed, and on the other, basmati prices, which had plummeted to Rs 30-32 per kilogram, have rebounded to their original range of Rs 38-40 per kilogram.
Price Resurgence
The price of various basmati rice varieties, which had dwindled to Rs 3,300-3,400 per quintal shortly after the imposition of the $1,200 per tonne MEP, has bounced back, surpassing Rs 4,000 per quintal.
The widely cultivated PUSA-1121 variety has been trading at approximately Rs 4,600 per quintal in recent days, indicating a robust resurgence.
Basmati’s Export Potential
In the fiscal year 2023, India exported around 17.8 million tonnes of non-basmati rice and 4.6 million tonnes of basmati rice. The export of non-basmati rice, of which 7.8-8 million tonnes was parboiled rice, has contributed significantly to India’s global rice trade.
Globally, rice prices have surged due to an anticipated decline in production, primarily attributed to the El Nino weather phenomenon, which has adversely affected rice production in Asian countries.
Government’s MEP Reevaluation
Last month, the government signaled its intent to reevaluate the MEP by accepting basmati consignments priced below $1,200 per tonne. The move indicated a willingness to revisit and possibly reduce the MEP to alleviate the burden on farmers.
The Ups and Downs of MEP
The MEP was originally imposed on basmati rice exports to curb the possible misuse of exporting white non-basmati rice under the guise of premium basmati rice. While the government extended the MEP on October 15, it swiftly indicated that the review of the MEP was under active consideration.
Farmers and exporters alike are closely watching this development as they navigate the fluctuating MEP, which has a direct impact on the rice industry.
As Diwali approaches, the resurgence of basmati rice prices provides a glimmer of hope for both farmers and exporters. However, the uncertainty surrounding the 2023-24 crop remains a matter of concern, as the rice industry prepares for the festivities.
