Indian Basmati Rice Exporters Fear Pakistani Competition as Floor Price Persists

Concerns are rising among India’s basmati rice growers as the country opts to maintain the existing floor price for basmati rice exports, potentially impacting overseas sales of this premium variety and causing a decline in farm income.

Basmati rice, renowned for its aromatic long-grain quality, is predominantly cultivated in India and Pakistan. India, being the world’s largest rice exporter, ships over 4 million metric tons of basmati to various countries including Iran, Iraq, Yemen, Saudi Arabia, the United Arab Emirates, and the United States.

In August, New Delhi established a minimum export price (MEP) or floor price of $1,200 per ton. While expectations were high for a reduction in the MEP, the government, on Saturday, declared its decision to maintain the floor price until further notice.

Last month reports came that India is likely to achieve the 111 million tons target for the Summer season as acreage stood higher than the last five-year average and late monsoon boosted the yields further. The Indian exporters hoped for a cut in the basmati floor price but the government recently decided to maintain it.

The move has left farmers and millers concerned about the impact on overseas sales and farm income. Sukrampal Beniwal, a basmati rice grower from the northern region, expressed the distress felt by farmers who are now grappling with harvested crops and a lack of buyers.

“We are staring at massive losses,” added Beniwal. As the summer-sown rice varieties are harvested between October and onwards, the prices typically witness a decline. The persistence of the $1,200 MEP, deemed steep by many, has intensified challenges for farmers, millers, and exporters.

Vijay Setia, a prominent exporter from the state of Haryana, emphasized the need for an immediate reduction in the MEP to a range of $850-$900 per ton to alleviate the impact.

Basmati rice farmers are facing difficulties in selling their produce, with millers and traders avoiding wholesale markets, leading to a drop of more than 20 percent in paddy prices for basmati varieties since the imposition of the MEP, according to traders.

“We are empowering Pakistan to seize control of the basmati rice market in the short term” stated an unnamed leading exporter talking to Reuters pointing out the frustration among farmers and exporters.

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