The Hindu Business Line : Pak scores overs Indian basmati

New Delhi, May 6 Even as the domestic basmati rice exporters suffer an export duty and a lowered minimum export price (MEP) with a ban on non-basmati rice export that pre-empted export of non-notified premium varieties such as Pusa 1121, Pakistan stole the thunder by fixing a higher and graded MEP on two varieties of basmati without slapping an export ban on its non-basmati variety.

Marathon meeting

Sources in the export industry told Business Line here that after a marathon meeting from April 29 night till the dawn of April 30, the Rice Exporters Association of Pakistan had with its Finance Minister, a notification issued by the Commerce Ministry on May 1, put the MEP for super basmati at $1,500 a tonne, medium grade at $1,300 a tonne and non-basmati Irri-6 at $750 a tonne. The higher MEP in both the first two varieties of Pakistan was far higher than the $1,000 MEP India has declared but not notified till date. It was contended in Islamabad that the higher MEP would confer maximum benefits on farmers and push growers to augment yield for the next crop. It was further stated that basmati rice production would go up to eight million tonnes in the next crop from the current crop of 5.5 million tonnes.

Advantage Islamabad

Islamabad said with the MEP in place, the value of rice exports would increase to $4 billion by the end of this year from the $1.2 billion last year. Policy analysts say that by putting a higher MEP, Pakistan is signaling the message to the rest of the world that its basmati rice is better quality than the counterpart Indian varieties. Already when India notified a variety in 2006 that was originally evolved by Pakistan, there was some resentment in Islamabad that led to the stalling of joint bid by New Delhi and Islamabad for a geographic indication (GI) to basmati rice.

Now by putting a higher MEP to its super basmati variety at $1,500, Pakistan has sent an unequivocal signal to the connoisseur of basmati that its variety is superior, deserving a premium price, against India’s basmati MEP at $1,000 a tonne. The sources said that it is time India also considered the MEP on varietal lines so that our market share abroad is not lost or impinged substantially.

Currently, it is reckoned India holds 53 per cent share in the global market of basmati rice and Pakistan the second slot with intense competition always simmering between the two exporters. India’s unquestionable sway persists because of constant technological improvement, marketing techniques and consistency in quality and reliability of supply.

Another important factor that weighed in India’s favour so far was that it seldom restricted its export of basmati rice even in PL 480 days.

Export duty by India

As the recent export duty imposed by India on its basmati rice by $200 would increase the export price by a hefty 20 per cent in the short-run particularly when rival Pakistan exporters do not suffer any such cost disadvantage in exports, the demand for Indian basmati rice abroad would distinctly come down which is reckoned by industry analysts to be somewhere in the range of 35-40 per cent or 4.5 lakh tonnes within one-year period.

If the sharp drop in demand in global market were to come true, the domestic market could not absorb the supply as it accounts for hardly 15 per cent of total production, derailing the sustainable operation of this premium crop in areas such as Punjab, Haryana, western Uttar Pradesh and contributing to the transfer of income of Indian basmati growers to Pakistani basmati paddy farmers, they cautioned.

The twin measure of lower MEP and a high export duty slapped on basmati rice by the Government as part of its anti-inflationary strategy to keep domestic availability of rice would damage the very sustainability of this export crop, imperiling the livelihood security of farmers growing basmati, the sources said.