MEP can lead to drastic fall in exports, suppress basmati prices, says AIREA

Basmati rice traders say that enforcement of a minimum export price can lead to a drastic fall in sales overseas and shrink farmers’ income as the new harvest begins.

The All-India Rice Exporters’ Association (AIREA) has conveyed to the government that its minimum export price (MEP) of $1,200/tonne will be a “deterrent” to exports.

The government on Sunday said only those contracts of basmati rice with a minimum export price of $1,200/tonne will be cleared for exports.


Exporters of basmati rice say that the government’s minimum export price is too high and can result in a plunge in export volumes, as more than 80% of the basmati exported was being sold at rates lower than this.

Although the government has said that a committee of the agriculture export promotion body APEDA will take a call on clearing contracts valued below $1,200/tonnes, exporters fear that export volumes will decline.

While the government claims that the average price of basmati exported in August was $1,214/tonne, AIREA says that in the first quarter of 2023-24, it was $1,106/tonne.

According to trade estimates, India produces about 7 million tonnes of basmati rice, of which about 5.5 million tonnes is exported. “We are afraid that the export volumes can decline drastically. Any fall in export volumes can adversely affect the price realisation of the basmati farmers, as India grows basmati primarily for the export markets,” said Vinod Kaul, executive director, AIREA.

Kaul said that the export valuation of the early maturing 1509 variety of basmati, which recently started arriving in Uttar Pradesh, is $700-800/tonne.

“We expect 1509 varieties to account for more than 50% of the basmati rice production this year. Looking at its prevailing market price, which is significantly lower than the MEP of $ 1200/tonne, we fear that the export volume could be adversely affected,” said Kaul.