The government is probably going to soon announce measures to loosen the limitations on rice exports that were put in place last year, given the abundance of rice inventories and healthy kharif crops. According to sources who spoke with FE, the MEP of $ 950 per tonne for basmati rice is anticipated to decrease, and a plan to impose a set cost of $ 90 per tonne on shipments of non-basmati rice a departure from the current norm of 20% export duty on parboiled rice is being examined. Prahlad Joshi, the minister of food, is expected to discuss the matter with the rice exporters on Monday.
Basmati Rice MEP Likely to Be Reduced
Aromatic long-grain Basmati rice was subject to a minimum export price (MEP) of $ 950/tonne last year; however, reports indicated that the MEP will likely be lowered to $ 800 or $ 850/tonne. Exporters, meanwhile, have insisted that the MEP on aromatic rice be lowered to $700 per tonne. The mandi price of early harvested 1509 basmati paddy types, according to traders, has dropped from Rs 3000/quintal a year ago to Rs 2500/quintal. According to exporters, the arrival, which is anticipated to start at the end of the month, is likely to drive down the price of premium Pusa 1121 type paddy which accounts for over 70% of exports below the Rs 4000/quintal level of the previous year.
Basmati Rice Exporters Demand Lower MEP to Compete Globally
Vice president of the Punjabi basmati rice millers and exporters association Ranjit Singh Jossan told FE, "We are losing our competitive edge in the global market of basmati rice exports against our key competitors as they follow a lower MEP of $750/tonne and prospects of bumper crops would pull down domestic prices hitting farmers." Since October 2022, retail rice prices have increased by double digits, with a 10.89% increase in July. Currently, 39.42 million hectares of paddy have been transplanted, an increase of 4.4% year over year (y-o-y). Based on a five-year mean, around 98% of the paddy planting has been finished thus far.
USDA Forecasts Record Rice Production in India
India is expected to produce a record 138 million tonnes (MT) of rice in 2024-25, exceeding the agriculture ministry's forecast of 136.7 MT for 2023-24, according to the USDA's August 2024 crop outlook. For the 2024-25 kharif crop, the government has set a target for rice purchase of 48.5 MT, an increase of 5% from 46.3 MT in 2023-24. The buffer requirement of 10.25 MT for October 1 has been exceeded by the Food Corporation of India (FCI), which now has 43.57 MT of rice, including 32.61 MT in stockpiles and 10.96 MT from millers.
Conclusion
In conclusion, easing export restrictions and potentially lowering the minimum export price for Indian rice could boost its global competitiveness. With strong domestic production and favourable forecasts, exporters should stay updated on these changes to refine their strategies and maintain their market position. The upcoming discussions with Food Minister Prahlad Joshi will be crucial in shaping India's rice export future.
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