Basmati exporters call off boycott, to resume paddy purchase

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Basmati exporters on Thursday called off their boycott of purchasing paddy from growers following a meeting with Food Secretary Sanjeev Chopra. The Secretary is believed to have assured them of a decision soon on their demand to lower the minimum export price (MEP) from the current $ 1,200/tonne. Though exporters said a decision is likely to be taken in a week, official sources denied any such assurance of a deadline had been given.

Most of the exporters stayed away from buying basmati paddy starting October 15 after an advisory issued by All India Rice Exporters Association (AIREA).

In an advisory to its members on October 14, AIREA said, “The government has continued with the mandate to register basmati contracts only above $1,200/tonne for issuing RCAC. In light of this AIREA members are advised to exercise extreme caution in the procurement and inventory holding of paddy as these are expected to significantly impact business viability and potential of basmati export at remuneration realisation. In the interest of the trade, members may discontinue/stop buying paddy and rice with immediate effect.”

After a committee of ministers, headed by Home Minister Amit Shah, rejected the exporters’ demand to reduce the minimum export price (MEP) of basmati rice to around about $900/tonne, the Food Ministry on October 15 said the demand was still under “active consideration”. “Based on the discussions in the meeting (with exporters), review of FOB price of contracts for the issue of Registration–cum–Allocation Certificate (RCAC) by APEDA for export of basmati rice is under active consideration of the government,” the Food Ministry said. However, the present arrangement (of $1,200/tonne) will continue until an appropriate decision is taken by the government, it said.

Scope to tweak

From August 28, the Government’s agricultural export promotion body APEDAbegan implementing the Commerce Ministry’s direction by making changes in the online application filing system after which no Basmati export contract has been registered below $1,200/tonne. It is similar to fixing MEP but leaves scope to tweak at any point without going through the normal procedure.

At the virtual meeting of basmati rice stakeholders on September 25, Commerce Minister Piyush Goyal was said to have agreed for a downward revision to $850 a tonne, industry sources said.

According to APEDA data, the average price realised by basmati exporters was $1,048.82/tonne in October 2022, $1,016.29 in November 2022, $998.16/tonne in December 2022 and $1,045.21/tonne in January 2023. Maximum arrivals of basmati are recorded during these four months of the season (October-January).