India has slashed the floor price for basmati rice exports from $1,200 to $950 per metric ton, according to a government source, Reuters reported on Thursday.
The move comes in response to complaints from farmers and exporters who argued that the higher floor price was impeding trade by causing delays in shipments.
The Indian government had initially imposed a minimum export price (MEP) of $1,200 per ton for basmati rice shipments in August, aiming to control local prices ahead of crucial state elections.
Although there were expectations that the MEP would be reduced with the arrival of the new season harvests, the government announced on October 14 that it would maintain the higher price until further notice. This decision provoked dissatisfaction among farmers and exporters who claimed that the new season’s rice crops had led to a decline in domestic prices.
Subsequently, authorities stated that they were actively reviewing the MEP. Atul Garg, the managing director at GRM Overseas (GRMO.NS), a leading exporter, remarked, “The reduction will reinstate the competitiveness of Indian basmati rice shipments in the global markets. Exporters are now working towards regaining the lost ground.”
On the other hand, Pakistan’s local paddy prices for Basmati 1509 cultivar have started rising again after falling to nearly Rs. 3,500 per maund during last week which is primarily because the majority of the Basmati crop has already entered the grain markets and arrivals have declined. Prices across Kasur, Sahiwal, Sheikhupura and Gujranwala were reported at Rs. 4,000 to Rs. 4,500 per maund while in Bahawalpur, Bahawalnagar, Multan, Jhang and Faisalabad, prices were reported between Rs. 4,000 to Rs 4,650 per maund.
Pakistan Rice exports clocked at $406 million during Q1FY23 reporting a 0.98 percent increase over $402 million during the same period last year. Basmati exports recorded at $158.5 million up 20.4 percent from $131.6 million while non-basmati exports clocked 8.5 percent down at $247.8 million against $270.8 million during SPLY. According to Trade Development Authority Pakistan, Non-Basmati exports account for 70 percent of Pakistan’s Rice exports in terms of dollar value.
“Pakistan’s non-basmati exports to Africa are facing challenges as due to the current local price and dollar calculation, the cost of exporting non-basmati rice to Africa is high, affecting regular supplies to the region”, commented Amit Kumar, an international rice trader from Karachi while talking to ProPakistani
He pointed out that Indonesia has been the only buyer at a good price, but regular supplies to Africa have been impacted due to the cost disparity between current prices and the calculated cost in Africa.
Talking about the Basmati Rice prices, he stated that they are probably high only because of 0.5 million tons of duty-free imports by Africa. He revealed that exporters who have booked rice orders in Indonesia are actively buying until the end of November and those who have not enrolled in Indonesia orders are waiting for prices to decrease, aiming for around Rs. 140/- for 5 percent silky Sortex.
The trader also highlighted that the market’s trajectory depends on the stability of the dollar and market trends. If the dollar stabilizes at the current position, he expects the market to fluctuate between Rs. 145-150 per kg for silky 5 percent broken rice.
India and Pakistan are the primary exporters of basmati rice, with New Delhi alone exporting over 4 million metric tons of the premium long-grain variety to countries such as Iran, Iraq, Yemen, Saudi Arabia, the United Arab Emirates, and the United States.
India, being the world’s largest rice exporter, has also implemented restrictions on the exports of non-basmati rice varieties.
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