The high-level Inter-Ministerial Committee (IMC) chaired by Union Home and Cooperation Minister Amit Shah will review the issue of low prices for basmati paddy on Wednesday.
The issue will be reviewed mainly as one of the reasons for the Centre to scrap the $950 a tonne minimum export price (MEP) on basmati rice. “Exporters told the Centre that farmers will get higher prices for basmati paddy if the MEP is removed. But it has not happened,” said a trade source, who did not wish to be identified.
The Centre ended the MEP on basmati rice on September 14 but basmati paddy prices have not increased to levels that will satisfy farmers. With farmers agitating for making minimum support prices (MSP) legal, the Government is trying to ensure that they get at least remunerative prices.
Average price up
The weighted average price of basmati paddy has increased from ₹2,565 a quintal on September 13 to ₹3,070, particularly for the 1509 variety, currently. During the same time a year ago, the weighted average price was ₹4,016.
Data from Agmarknet portal, a unit of the Ministry of Agriculture and Farmers’ Welfare, indicate that basmati 1509 variety prices in some parts of Uttar Pradesh are ruling below ₹2,500 and below ₹3,000 a quintal in parts of Haryana and Punjab.
Sources said Haryana and Punjab, in particular, have told the Centre that they would encourage farmers to switch over to maize and oilseeds if a legal guarantee of MSP is given.
The IMC review of basmati paddy prices is being held also in this background. A major reason for basmati paddy prices to rule lower than last year is that its production is higher this year compared with last year.
15-20% output increase
On September 11, All-India Rice Exporters Association President Satish Goel told businessline that basmati production will increase by at least 15-20 per cent this year.
“Farmers, who had received good returns last year, have increased the area under basmati. The expectation is that the crop will be good this year and will increase by a minimum of 15-20 per cent,” he said then.
Prices have increased primarily since Iran, a major destination for Indian basmati, imposed its customary three-month ban on rice imports to protect its domestic growers till October-end.
Despite the Iran ban, basmati exports in the first half of the current fiscal increased to 3.24 million tonnes (mt) from 2.61 mt a year ago. Foreign exchange earnings from the fragrant rice increased by 14 per cent to $3.38 billion from $2.96 billion during the period.
Crop survey
Sources said the Agricultural and Processed Food Products Export Development Authority (Apeda) could not conduct basmati paddy production survey this year due to lack of consensus among exporters on the inferences of last year’s survey.
According to Apeda’s basmati crop survey last year, basmati production was 98.45 lakh tonnes and its acreage was over 21.35 lakh hectares. On the other hand, exporters face risk in the Iran market in view of the geopolitical situation in West Asia. Exporters have turned cautious in building inventories as significant amounts are outstanding against exports.
Sources said some exporters, who purchased at higher prices, are still carrying inventories and are clueless how to liquidate them.
A trade analyst said the Centre should conduct a detailed study on the basmati paddy price discovery “to understand the oligopolistic market conditions and imperfections”.
