The Central Government’s recent decision to maintain the Minimum Export Price (MEP) for Basmati rice at $1,200 per tonne has sent shockwaves through the farming community, leaving Basmati rice growers in a state of distress. This move has had an immediate and tangible impact, as the prices of Basmati 1509 and 1718 varieties have already taken a hit, falling by Rs 300 per quintal for both top-quality and slightly lower-quality grains since the announcement.
Disappointment Among Farmers
Basmati growers, who have been instrumental in Punjab’s transition from water-intensive paddy crops to the shorter-duration Basmati variety, are deeply disappointed with the government’s choice. Their disappointment is intensified by the fact that the rates have already declined by 500 to 600 per quintal in the past week, further squeezing their already narrow profit margins.
Government’s Decision on MEP
The Central Government’s imposition of the MEP on Basmati rice on August 25 initially raised concerns among exporters in Punjab and Haryana, the two major Basmati rice-exporting states. Union Minister Piyush Goyal had earlier hinted at a lower MEP of $850 per metric tonne following repeated requests from exporters. However, the decision to maintain the MEP at $1,200 per tonne has come as a severe blow to both growers and exporters.
Continuation of Registration-Cum-Allocation Certificate
The Department of Food and Public Distribution under the Ministry of Consumer Affairs and Food and Public Distribution has issued a circular stating that the arrangement for the registration-cum-allocation certificate for Basmati rice may continue beyond October 15 until further notice. This extension provides a temporary respite, but it doesn’t address the underlying concerns related to the MEP.
Reasons for Price Decline
The decline in Basmati rice prices can be attributed to a multitude of factors, including the increased MEP, adverse weather conditions affecting crop yield, bulk arrivals in recent days, and international tensions such as the Israel-Palestine standoff. These issues have collectively placed immense pressure on the already fragile Basmati rice market.
Impact on Exporters
Exporters are voicing their concerns about the high MEP, which they believe will further harm the industry. With such a high MEP, they fear that no export orders are likely to be executed, driving potential buyers to source Basmati rice from Pakistan instead of India. This shift could have long-term repercussions on India’s Basmati rice export market.
Concerns for Farmers
The high MEP poses a significant threat to farmers, especially those who invested in expanding Basmati cultivation in flood-affected states like Punjab. Furthermore, with traders hesitant to purchase from farmers due to the uncertain export scenario, the financial stability of Basmati growers is at risk.
Export Statistics
Basmati rice is a crucial export commodity for India. Data from April to July revealed that approximately 71.40% of Basmati rice exports fell within the price bracket of $700-1,200 per metric tonne. Last year, India exported 4.5 million tonnes of Basmati rice, valued at around Rs. 38,000 crore. The high MEP threatens to disrupt this economically significant market, affecting not only farmers but also the Indian economy as a whole.
In conclusion, the government’s decision to maintain the high MEP for Basmati rice has left farmers and exporters in a precarious situation. With falling prices and limited export opportunities, the Basmati rice industry faces an uncertain future. Finding a balanced approach that supports both growers and the export sector is imperative to protect this vital segment of India’s agricultural economy.
