New Delhi: Anxious over continuing tight rice supplies and high prices for the staple in the open market, an empowered group of ministers on food (EGoM) headed by finance minister Pranab Mukherjee is understood to have okayed a proposal to ensure that the effective minimum export price (MEP) for basmati rice is stringently enforced at $900/tonne instead of $788/tonne as currently prevailing.
The EGoM, it is understood, has given its nod to withdraw a notification that allows for 12.5% commission allowed to traders to be considered when computing the MEP for basmati; the move effectively diluted the MEP by $122/tonne although the officially stated MEP was $900/tonne, thus allowing high value rice, including non basmati varieties such as Sona Masuri and Sharbati to be exported. A notification is yet to be issued on the issue of doing away with the commission while computing MEP for traders but is expected soon.
Enforcing a much higher MEP will prevent high value non basmati varieties, consumed widely in the domestic market, from going out under the basmati label.The government, which is still dithering over the issue of whether or not to import non basmati rice to boost domestic supplies and calibrate prices even as global rice prices shoot up in anticipation of India's imports, expects that the move of enforcing the MEP at $900 instead of allowing dilutors such as commission computation to prevail will increase domestic supplies of high value rice. "The EGoM has endorsed the need to remove the commission while computing the MEP, enforcing $900/tonne as the effective MEP for basmati exports. A notification will follow," a government offiical said.
The move has the backing of the food and agriculture ministries which have, in either case, not been fully supportive of the earlier EGoM decision to reduce the MEP for basmati to $900/tonne at at time when widespread reports of a significant drought and resultant production shortfall for paddy (kharif or summer sown rice shortfall is currently pegged at around 15 million tonnes) was coming in. The view prevailing here was that all cases of goods covered by an MEP should be scrutinised stringently by the government in a manner that nothing diluted the MEP level.
Source : The Economic Times