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Informist, Friday, Aug 23, 2024

 

By Pallavi Singhal

 

NEW DELHI – The government is likely to cut the minimum export price of basmati rice to around $850 per tn from the current $950 per tn, a senior government official told Informist. A notification to this effect may be issued within two weeks, the official said.

 

The likely move comes at a time when global prices of basmati rice varieties have fallen to $800-$850 per tn.

 

"Prices of basmati have fallen in the past few months in global trade due to an increase in supply from Pakistan," said Anand Chandra, executive director of Arya.ag, which has more than 3,000 warehouses for wheat and rice across the country. "There has been a 5-10% increase in Pakistan's sowing and production owing to an increase in demand last year, when India put up export curbs," he said.

 

India and Pakistan are the leading exporters of the premium long-grain variety of rice and export largely to countries such as Iran, Iraq, Yemen, Saudi Arabia, the United Arab Emirates, and the US.

 

Pakistan has set the minimum export price on its cheapest basmati variety PK198 at $700 per tn and that on its best varieties at $900 per tn. The low floor price makes Indian basmati varieties less competitive in the global market, the official said.

 

"Indian basmati variety 1509 competes with Pakistan's lowest variety. Farmers have started growing more of it as it reduces the harvest duration by 30 days. But the current curb is making sales difficult," Vijay Setia, managing director of Chaman Lal Setia Exports, said.

 

In the domestic market, prices of basmati rice have fallen due to expectations of a good kharif crop and as stocks are high. The acreage under paddy this year is 6% higher from a year ago at 36.9 mln ha and the country's rice stocks as on Aug 1 were the highest since 2005 at 32.8 mln tn.

 

The price of basmati rice in the wholesale market of Vashi, near Mumbai, was down Thursday as new crop has started arriving in the mandis of Punjab and Haryana, traders said.

 

A cut in minimum export price will give a boost to exports and lead to fall in domestic stocks. This, in turn, will push up prices in the domestic market, Setia said. He expects price of the 1509 variety, which is currently at 2,300 rupees per 100 kg, to rise to 2,700-2,800 rupees per 100 kg if the government lower the minimum export price of basmati rice.

 

However, Ajay Srivastava, founder of Global Trade Research Initiative, said, "...higher MEP is unlikely to hurt India's long-term export prospects because India and Pakistan are the only global suppliers of authentic basmati rice, and production is limited." Srivastava's belief is supported by India's basmati rice exports in Jan-Jun, which rose 24.3% to $3.42 bln from $2.75 bln in the same period last year.  End

 

Edited by Ashish Shirke

 

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