Government Reduces Basmati Rice Export Floor Price to $950 per Tonne
New Delhi, October 25, 2023 - In response to concerns from traders and exporters, the Indian government is set to announce a formal notification to reduce the minimum export price (MEP) of Basmati rice to $950 per tonne. The move comes as the current MEP levels were impacting shipments and making them unviable.
The government had previously imposed a floor price of $1,200 per tonne for overseas shipments in August as a measure to stabilize domestic rice prices. However, following complaints from traders about the adverse impact on exports, a decision was made to reduce the MEP during a meeting held late on Monday evening. It is important to note that the decision has not been formally notified as of yet.
Food Minister Piyush Goyal, in response to concerns raised by industry representatives, had earlier assured traders that the government would review the MEP to address the challenges faced by exporters.
The MEP is a critical price threshold that exporters must adhere to when selling to global buyers, and it serves as a tool to regulate and restrict exports. In a bid to control domestic prices, India, the world's largest rice exporter, had previously imposed a ban on overseas sales of white non-basmati rice and wheat.
While the expectation was that the MEP would be reduced with the arrival of the new season's harvest, the government announced on October 14 that it would maintain the existing MEP until further notice. This decision sparked concerns and frustration among farmers and exporters, who noted that the arrival of the new crop had led to a decrease in domestic prices.
Authorities have since actively reviewed the MEP, resulting in the decision to reduce it to $950 per tonne. The move is expected to provide relief to the export industry and make overseas shipments more viable.
At present, various basmati rice varieties, including 1121 and 1509, are entering the market, with the Pusa basmati variety soon to follow. Pure basmati rice is also anticipated to enter the market in December.
India remains a leading exporter of premium aromatic Basmati rice, annually shipping over 4 million tonnes, with a significant portion going to West Asian countries. The adjustment of the MEP is expected to positively impact the Basmati rice export market and further strengthen India's position as a key player in the global rice trade.