Why India's rice exporters want a cut in minimum export price — LT Foods MD Arora explains

The minimum export price serves as a pivotal factor in determining the baseline cost for exporting rice, and any revision to this figure could have ripple effects throughout the entire value chain.

Also, in order to enhance protection measures for basmati rice exports, the government has chosen to prohibit exports below the price of USD 1,200 per tonne. This measure has been taken to prevent potential instances of "illicit" shipment of regular white non-basmati rice disguised as high-quality basmati rice.

As per the instructions, "contracts for basmati exports with the value of USD 1,200 per MT (tonne) only and above should be registered for the issue of Registration–cum–Allocation Certificate (RCAC)," the commerce ministry had stated in a recent directive.

On Sunday, August 27, the commerce ministry issued a directive instructing Agricultural and Processed Food Products Export Development Authority (APEDA), the agriculture produce export promotion entity, to refrain from registering agreements that are valued below $1,200 per tonne. Additionally, contracts that currently fall below this threshold of $1,200 per tonne have been temporarily suspended.

Talking about export restrictions on basmati rice, Arora said, “It does not impact us because LT Foods export aged rice and premium rice in our own brands (Daawat, Daawat Brown Rice), but as far as the industry is concerned, where mostly parboiled rice goes, this may have an impact.”

Meanwhile, Akshay Gupta, Head of Bulk Exports at KRBL said, “For us, it will be a very limited impact because we are into consumer packs and mainly into the branded segment and 90 percent of our exports would be above $1,200 MEP.”

During the fiscal year 2022-23, India's basmati rice exports amounted to $4.8 billion in value and 45.6 lakh tonne in volume. In contrast, non-basmati rice exports reached a value of $6.36 billion, with a volume of 177.9 lakh tonne for the same fiscal year.

According to data provided by the agriculture ministry, India's rice production is projected to have surged to 135.54 million tonne in the crop year 2022-23 (spanning from July to June), an increase from the previous year's 129.47 million tonne.

Meanwhile, Former Agricultural Secretary Siraj Hussain wondered why the government is delaying the slashing of import duty of wheat.

"There are reports from various parts of India indicating that there maybe a shortage of wheat to the extent of about 2.5 to 3 million tonne. And if the duty is slashed to zero, then the private trade may easily import wheat at southern post which will cool down not only the wheat prices, but it will also have an impact on rice prices because the two cereals are interchangeable in many parts of India," he said.

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