Govt to take call on raising basmati MEP
The government is examining the need to raise the minimum export price (MEP) for basmati rice to contain the rising domestic prices of this premium variety and prevent other high-value varieties from going out under the basmati label.
By Amiti Sen, ET Bureau |
NEW DELHI: The government is examining the need to raise the minimum export price (MEP) for basmati rice to contain the rising domestic prices of this premium variety and prevent other high-value varieties from going out under the basmati label.
The issue will be examined by the empowered group of ministers (EGoM) on prices when it meets next. The group takes crucial policy decisions relating to prices of commodities.
The agriculture ministry is pushing for raising the basmati MEP beyond $900 per tonne, but is facing opposition from the commerce department, a government official has said. “The agriculture ministry is making a case for increasing the minimum export price of basmati,” a commerce department official, who did not wish to be named, told ET.
While the price of non-basmati rice is now stable in the domestic market, basmati prices have been going up. The export price of basmati (1121) has gone up by about $200 a tonne to $1,100 a tonne in the recent months.
The minimum export price of basmati, which is the floor price for allowing exports, was lowered to $900 per tonne in September this year from $1,100 per tonne following intense lobbying by rice exporters, who claimed they were unable to compete with Pakistani basmati in the western markets as it was being sold for just $750 per tonne.
However, earlier this month the government decided to exclude the 12.5% commission given to foreign agents in the calculation of MEP for basmati. The commission, which works out to approximately $122 per tonne, effectively reduced the MEP to about $788 per tonne.
The lower export price level allowed other non-basmati, high-value rice to go out, boosting their domestic prices. That is what the EGoM may attempt to change now, with the government under intense pressure to control food inflation, which only dipped marginally last week from over 19% earlier.
“When the government has already decided that commission to agents will be excluded from the MEP, we, at the commerce department, do not think there is a further need to increase the MEP,” the official said.
Nearly 1.5 million tonnes of basmati rice was exported in fiscal year 2009.
The issue will be examined by the empowered group of ministers (EGoM) on prices when it meets next. The group takes crucial policy decisions relating to prices of commodities.
The agriculture ministry is pushing for raising the basmati MEP beyond $900 per tonne, but is facing opposition from the commerce department, a government official has said. “The agriculture ministry is making a case for increasing the minimum export price of basmati,” a commerce department official, who did not wish to be named, told ET.
While the price of non-basmati rice is now stable in the domestic market, basmati prices have been going up. The export price of basmati (1121) has gone up by about $200 a tonne to $1,100 a tonne in the recent months.
The minimum export price of basmati, which is the floor price for allowing exports, was lowered to $900 per tonne in September this year from $1,100 per tonne following intense lobbying by rice exporters, who claimed they were unable to compete with Pakistani basmati in the western markets as it was being sold for just $750 per tonne.
However, earlier this month the government decided to exclude the 12.5% commission given to foreign agents in the calculation of MEP for basmati. The commission, which works out to approximately $122 per tonne, effectively reduced the MEP to about $788 per tonne.
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The lower export price level allowed other non-basmati, high-value rice to go out, boosting their domestic prices. That is what the EGoM may attempt to change now, with the government under intense pressure to control food inflation, which only dipped marginally last week from over 19% earlier.
“When the government has already decided that commission to agents will be excluded from the MEP, we, at the commerce department, do not think there is a further need to increase the MEP,” the official said.
Nearly 1.5 million tonnes of basmati rice was exported in fiscal year 2009.
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