How Pakistan could outdo India in Basmati this year

Farmers are deeply disappointed with the government’s choice, claiming it undermines the interests of Basmati growers who have been contributing to Punjab’s shift from water-intensive paddy crops to the shorter-duration Basmati variety.

Already the rates have come down by 500 to 600 per quintal last week.

The Centre on August 25, imposed the MEP on Basmati rice, much to the worry of exporters in Punjab and Haryana, the major Basmati rice-exporting states. Following frequent requests from exporters, Union Minister Piyush Goyal on September 25 indicated a lower MEP of $850 per metric tonne.

But on Saturday, the Department of Food and Public Distribution under the Ministry of Consumer Affairs and Food and Public Distribution issued a circular that the arrangement (which was issued on August 25) for registration-cum-allocation certificate for Basmati rice may continue beyond October 15 till further order.

However, when no official notification was issued regarding this decision for almost three weeks, Basmati rates started plummeting on Friday as exporters anticipated an adverse government decision.

It is to be noted that Basmati crops are not purchased by the government but by private traders and exporters. Exporters predict that the rates will continue to decrease in the coming days.

High MEP led to Indian exporters returning empty-handed from two recent international food fairs as international buyers turned to Pakistan.

Farmer Diwan Singh Rodala from Amritsar sold his top-quality Basmati 1509 at Rs. 3,150 per quintal, which is approximately Rs 650 less per quintal compared to the beginning of the harvest season in September when it was selling at Rs 3,800 per quintal.

Similarly, Jatinder Pal Singh from Ghanupur Kale village sold his Basmati 1847 variety at Rs 2,700 per quintal, which was around Rs 400 less per quintal.

“In the Amritsar market, the largest for Basmati 1509 in the state, where around 60 lakh Basmati bags arrive annually, farmers have seen rates drop from Rs. 3,600-3,800 per quintal to 3,150 per quintal for 1509 and Rs. 2,700 for 1847 from Rs. 3,000 to Rs 3,100 per quintal in the past couple of days. Even medium-quality grain is now fetching only Rs 2,500 to 2,700 per quintal, down from Rs 3,100 to 3,200 per quintal,” said Rakesh Tuli, president of Punjab Anaaj Mandi Mazdoor Union.

Experts attribute this price decline to increased MEP, adverse weather, bulk arrivals in the past few days, and international tensions, particularly the Israel-Palestine standoff.

Exporters argue that the high MEP will further harm the industry.

Vijay Setia, the former president of All India Rice Exporters Association, alleged that the government is all out to destroy Basmati exports from the country. This year all orders are being fetched by Pakistan which has already increased the area under basmati this season, Setia said.

“With 70 per cent of Indian Basmati being exported at the bracket of $700 to $1,200 per metric tonne, no export orders are likely to be executed at the high MEP. The industry finds it puzzling that the central government is not following the recommendations provided by central teams after visiting Haryana, Punjab, and Uttar Pradesh and assessing the Basmati industry’s situation after implementing the new MEP,” said Setia, adding that the minister had given the positive indication during the meeting last month.

“The government knows how our exporters returned empty-handed without getting a single export order despite Indian Basmati’s huge demand in several countries during the two international food fairs – one held in Istanbul, Turkey, from September 6 to 9, and the other in Iraq from September 19 to 21,” said Setia.

The Basmati export data from April to July revealed that around 71.40 per cent of exports fell within the price bracket of $700-1,200 per metric tonne.

“The government’s high MEP may negatively impact farmers, particularly those who expanded Basmati cultivation in states like Punjab affected by flooding. Approximately 41 per cent of the expanded Basmati cultivation is dedicated to short-duration varieties, which typically fetch $700 to $1,000 per metric tonne in the international market. Indian Basmati rice exports are economically significant, with 4.5 million tonnes exported last year, valued at approximately Rs. 38,000 crore,” said Ashok Sethi, director of the Punjab Rice Millers Export Association.

He added that only 2-3 per cent of the total Basmati rice grown in India is consumed domestically, with the majority being produced for export. The unfortunate part is that the traders would be reluctant to purchase from farmers when they could not execute export orders due to high MEP.