The Indian government is set to lower the minimum export price (MEP) of basmati rice to $850 a tonne with Commerce Minister Piyush Goyal ordering immediate revision.
While holding a virtual meeting of basmati rice stakeholders on Monday, Goyal initially said the Centre would lower the MEP to $900 a tonne. “But the stakeholders impressed on the Minister to lower it further,” said a source, who took part in the meeting but did not wish to be identified.
An exporter, who was part of the meeting, said the stakeholders had expected the government to lower the MEP to $950 or $900 but were surprised over the announcement.
The move comes on the heels of a section of exporters carrying out a campaign to lower the MEP for basmati saying there were no orders for the fragrant rice in the global market.
They argued that growers would be affected since they would not be able to buy the long-grained rice from them. Punjab BJP leader Sunil Kumar Jakhar had also impressed on the Commerce Ministry to lower the MEP to help growers, the source said.
However, another section of growers said the move was a “blunder”. “This is unfortunate since basmati rice will be losing its premium status. When parboiled rice prices are rising and are ruling over $650 a tonne, the lowering of MEP is not a wise move,” said a second exporter, who was not part of the virtual meeting.
The source who took part in the meeting feared that a lower MSP will facilitate exports of non-basmati rice in the garb of the fragrant rice. “In today’s market, buyers, especially non-resident Indians, will be prepared to pay that much for white rice varieties such as Ponni or Sona Masuri,” the source said.
The second exporter said in 2012, the MEP for basmati was set at $900. “Setting an MEP lower than what was fixed in 2012 is unfortunate,” he said.
“Based on current prices, MEP below $1,150 is a symbol of diluting the quality of basmati rice when Pakistan gearing up to claim GI tag for its basmati,” said S Chandrasekaran, a Delhi-based trade analyst.
Presistent dilution of basmati rice quality with the view of consumer acceptance and then perception will make it generic. “We cannot undo the damage inflicted on the heritage in the future,” he said.
The cut in MEP comes at a time when basmati prices are expected to gain in view of Iran getting $6-7 billion to buy humanitarian goods following a prisoners’ swap with the US, which released the money held by South Korea for the crude oil supplied by Teheran.
Higher Pak MEP
Last week, Pakistan fixed the MEP for its super basmati rice at $1,102 a tonne. “Fixing a MEP lower than basmati is not good for Indian basmati. We are lowering our own rice in the global market,” the said the trader.
Data from the Agricultural and Processed Food Products Export Development Authority show that basmati exports during April-July this fiscal year were 1.61 mt valued at $1.77 billion compared with 1.51 mt valued at $1.57 billion a year ago.
According to the Thai Rice Exporters Association, Indian basmati price is quoted around $1,220 a tonne in the global market.
(With inputs from Prabhudatta Mishra, New Delhi)