The Hindu Business Line : The Pusa 1121 puzzle

By mislabelling Pusa 1121 as non-basmati rice, its growers and exporters will be deprived of the benefits of export subsidy and the premium price this evolved variety commands abroad.

If the farmers should get remunerative returns as determined by markets, the confusion over rice exports must be removed.

G. Srinivasan

The UPA Government, nearing its five-year term, may get the credit for bringing the focus back on the farm sector and livelihood concerns of legions of farmers, in contrast to the previous NDA government which paid scant attention to the agrarian sector.

Whether it is raising the minimum support price (MSP) or launch of the National Food Security Mission, a Centrally-sponsored scheme, aimed at augmenting production of rice, wheat and pulses through area expansion and sustainable productivity increase in specific districts, ensuring flow of credit to the farm sector from banking channels or the Rs 71,680-crore loan waiver scheme to benefit 30 million small and marginal farmers and about 10 million other farmers, the UPA’s record unmistakably indicates where its vote-bank is.

Foodgrains production in the last three years, at 213.73 million tonnes, with buffer stocks of foodgrains as on July 1 at 36.3 million tonnes, against a norm of 26.9 million tonnes (26 per cent higher) is creditable. There is also a strategic reserve of 5 million tonnes over and above wheat and rice stockpiles in the granaries.

Selective export ban

Even as the Centre’s initiatives on the farm front have been beneficial, the soaring prices of food and fuel the world over have led to domestic inflation running into double digits in the second half of 2007-08, causing authorities to extend a selective export ban on some grain items and, in particular, on non-basmati rice. However, the export of premium rice such as basmati with a minimum export price (MEP) is permitted.

Other measures to shore up domestic supply were slashing the import duty on a range of farm goods such as rice, wheat, maize, pulses, edible oil, milk powder, butter and ghee drastically. Though the duty cut on farm goods is temporary, to ease domestic availability, it goes against the country’s commitment to the WTO, where the bound duty is pegged at a far higher level so that cheap imports do not harm domestic agrarian interests over the long haul. But this duty-free import helps strengthen the domestic supply situation against potential price flare-ups.

Procurement of rice during the current kharif marketing season is 27 mt as in the first week of September, or 2.2 mt more than in the corresponding period of the previous kharif marketing season of 2006-07. In view of the ban imposed on April 1, 2008 on non-basmati rice, exports of non-basmati rice during the current fiscal year (2008-09) up to August were lower, at 5.09 lakh tonnes, compared to 2.4 mt in the corresponding period last year.

Non-basmati varieties

Exports of basmati rice were also lower, at 4.16 lakh tonnes this year, against 4.42 lakh tonnes in the corresponding period last year. The ban on non-basmati rice affected premium varieties such as Ponni, Matta, Sona Masuri, largely exported from the South, to serve expatriate Indians elsewhere, particularly in South-East Asia and West Asia.

The ban on non-basmati rice did not affect Pusa 1121, an evolved variety of basmati rice with one traditional great-grandparent of basmati, because, of the basmati rice export from India, a chunk shipped continues to be Pusa 1121 evolved basmati with the exporters defraying the export duty and continuing to send this cargo as basmati.

Though Pusa 1121 is still not on the notified list of basmati rice as per the Seeds Act 1966, the Agriculture Ministry through a memorandum on May 29 expanded the definition of basmati rice by including in the family history (genealogy) a basmati variety notified under the Seeds Act 1966 to pass basmati quality genes into the new evolved varieties.

This was subsequently endorsed by the Central Sub-Committee on crop standards, notification and release at its meeting held in Bhubaneswar on August 8, paving the way for inclusion of Pusa 1121 as basmati rice to ensure enhanced price realisation to growers and traders of this variety of rice.

Even as the matter of including Pusa 1121 variety as basmati rests there, for some inexplicable reasons, the Director General of Foreign Trade (DGFT) lifted the ban on export of non-basmati rice on September 4, to be applicable prospectively only in the case of Pusa 1121 variety from October 15.

In the process, the Commerce Ministry tacitly gave the Pusa 1121 evolved basmati variety the non-basmati status, when growers and traders of this rice variety have been exporting it as basmati rice all these years, realising premium prices. Interestingly, within two days of its declaration, the DGFT came up with yet another notification allowing export of Pusa 1121 as non-basmati rice with immediate effect from the country’s existing supply pool.

Inexplicable move

The point to ponder is that if the domestic situation of rice availability constrains export of any rice other than the premium variety such as basmati, how is it that among the non-basmati rice categories, only Pusa 1121 has been chosen to be exported, leaving other premium non-basmati varieties such as Ponni, Sona masuri and Matta in the lurch. This has raised the ire of producers of such types of rice as they command considerable overseas sales of premium rice.

What surprises trade and industry in the inexplicable move of the Agriculture and Commerce Ministries is their determination to see that Pusa 1121 is not evolved basmati rice but only non-basmati rice; as such, it poses no threat to domestic availability among other non-basmati but premium varieties and, hence, could be exported, even without any export duty.

When premium basmati rice attracts export duty of $200 per tonne, it is puzzling that the authorities do not bother to realise export duty on Pusa 1121 by simply declaring it non-basmati rice for export purposes.

Senior Commerce Ministry officials maintain that the recognition of Pusa 1121 is “a separate issue which the Agriculture Ministry is to finalise as it has also to defend whether it is basmati or not under Seed Act, 1966 and other protocol”.

According to the All-India Rice Exporters Association President, Mr Vijay Setia, Pusa 1121 variety is exported and accepted as basmati rice and the Punjab Agriculture Department has released this variety for cultivation as basmati. He said that basmati rice also qualified for export subsidy in the European Union (EU) of 65 euro per tonne. By mislabelling it as non-basmati rice, the Indian growers and exporters of this rice would be deprived of the benefits of such subsidy.

Interestingly, India’s main rival in rice trade, Pakistan, has also set minimum export prices for its basmati and non- basmati rice this year with a view to conferring maximum benefits on farmers and to persuade growers to augment yield for the next crop.

Expectations are that basmati rice production in Pakistan would go up to 8 million tonnes in the next crop.

In contrast, in India, the recent removal of the ban on non-basmati restricted only to Pusa 1121 variety would see that rice exports overall do not exceed two million tonnes this year at a time when global prices for premium and popular Indian rice have seldom been so good.

If the authorities keep in mind the interests of growers of premium rice, both traditional and evolved varieties, and if the Government’s intention is to ensure that farmers do get remunerative returns as determined by markets and not by administrative fiat, it is time the confusion shrouding rice exports and various definitional rigidities are removed once for all. This would help rice farmers realise really rewarding returns on premium varieties produced out of hard toil.

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