Basmati exporters stop buying to protest pricing curbs

Kolkata: Basmati exporters and millers in Haryana, Punjab and western Uttar Pradesh stopped buying rice from 300 mandis (wholesale markets) across these states from Saturday evening, following the government's decision to retain the minimum export price (MEP) at $1,200 per tonne. The MEP is too high for India's basmati exporters to compete in the global markets, said industry executives.

"A number of exporters and millers have stopped purchase of paddy/rice as the government has not lowered the MEP. This is despite the government promising us at the last meeting held on September 25 that the MEP will be lowered to $900 per tonne," said Vijay Setia, former president of the All India Rice Exporters Association. "The meeting, which happened virtually, was presided over by Union commerce and industry minister Piyush Goyal."

Exporters said only 20% of the new crop - 1509 variety - has been procured till now and the rest 80% is lying with the farmers or at the mandis.

Farmers of the three states are staring at a huge loss as they do not know where to sell the newly harvested basmati rice, which is mostly exported and is hardly consumed domestically. On August 25, the government prohibited the exports of basmati rice below $1,200 per tonne to prevent potential instances of "illicit" shipment of regular white non-basmati rice disguised as high-quality basmati rice. It also kept the sub-$1,200 per tonne rice contracts in abeyance and asked the Agricultural and Processed Food Products Export Development Authority to set up a committee to evaluate the contracts. Raghbir Singh, an agitated farmer from Karnal, said, "The government's decision not to lower the MEP will result in agitation from the farmers and will have an impact on the upcoming state elections." "It should be monitored fortnightly to curb inflation and the price bar should be raised as per need" he said.

Of the total acreage of 1.7 million hectares under basmati rice, the 1509 variety accounts for about 40% of the area. Exports of basmati rice in 2022-23 stood at 4.5 million, valued at ₹38,524.11 crore, with the Gulf nations being the major buyers. More than 80% of basmati rice produced in India is exported. Setia said it is understandable that the government wants to control inflation.

The Food Corporation of India sells its rice in the open market at ₹31