Exporters stop buying Basmati paddy, Centre to review Basmati MEP

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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 Sunday said that the demand is still under “active consideration”.

“Based on the discussions in the meeting with exporters, review of FOB price for issue of RCAC by APEDA for export of basmati rice is under active consideration of the government,” the Food Ministry said. However, the present arrangement (of $1200/tonne) will continue until an appropriate decision is taken by the government, it added.

Government’s agri export promotion body APEDA from August 28 implemented the Commerce Ministry’s direction by making changes in the online application filing system after which no Basmati export contract is getting registered below $ 1,200/tonne. It is similar to fixing a minimum export price (MEP), but leaves scope to tweak at any point without going through the normal procedure.

Commerce Ministry’s direction

The food ministry said that a series of measures have taken to check the domestic prices of rice and ensure adequate availability for domestic consumers and one such measure being that contracts for Basmati rice exports with the value of $ 1,200/tonne and above only may be registered for issue of Registration–cum–Allocation Certificate (RCAC).

“This measure was necessitated as the government had received credible field reports regarding misclassification and illegal export of non-basmati white rice, exports of which have been prohibited with effect from July 20. It had been reported that non-basmati white rice was being exported under the HS code of Basmati rice,” the ministry said.

The decision to continue the current MEP was taken at a committee of ministers and was conveyed on October 14 by the Food Ministry to Commerce Ministry and APEDA.

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 had said.

Advisory by AIREA.

Vijay Setia, a former president of All India Rice Exporters Association (AIREA), told business line that most of the exporters stayed away from buying basmati paddy on Sunday after an advisory issued by AIREA.

In an advisory to its members on October 14, AIREA said: “The government has continued restrictions to register Basmati contracts only above $ 1,200/tonne for RCAC issuing. 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.”

Sources said that a delegation of AIREA is likely to meet APEDA Chairman on Monday to urge him again for lowering the MEP.

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 recorded during this four months of the season (October-January).