NEW DELHI: Prices for basmati rice have shot up from the earlier lows, indicating that traders and exporters are willing to buy from farmers at higher prices on expectations of better price realisation through exports. This could strengthen the case for hiking the minimum export price (MEP) for basmati from $900 per tonne to $950-1 ,000 per tonne to discourage exports of cheaper variety of rice masked as basmati.
The rice production is expected to drop sharply in the current kharif season because of poor monsoon. The government is keen to restrict the export of non-basmati rice to keep local supplies up. Recently, the government had allowed a 12.5% commission in the MEP calculation. This has effectively reduced the actual MEP from $900 per tonne to $788 per tonne, thus allowing cheaper varieties of rice, labelled as basmati, to be exported by traders.
Price of traditional basmati has moved up to Rs 31,000 per tonne (paddy ) while the price for the evolved Pusa 1121 variety has also gone up to Rs 22,000 per tonne (paddy). “The quotes for MMTC’s import tender for non-basmati varieties were between $379 and $550 per tonne, that is an average $450 per tonne. If non-basmati rice can fetch that price in the world market today, it stands to reason that basmati rice, which is premium quality, should fetch at least twice that amount in exports.
Only then will exporters be able to import twice the amount of non-basmati for domestic markets on every tonne of basmati exported ,” a government official said. Last year, India exported 2 million tonnes of basmati that fetched the country $2 billion in foreign exchange.
This year, the All India Rice Exporters’ Association (AIREA) has projected exports of 2.8 million tonnes, one third of which will constitute the popular Pusa 1121 basmati variety. The government had reduced the basmati MEP some weeks ago, even before the new rice came into the market in October, from an earlier $1,100 per tonne to $900 per tonne.
Source : The Economic Times