In a twist of events, India’s stronghold in the global basmati rice market is slipping away, all thanks to a governmental decision to impose a minimum export price (MEP) of $1,200 per tonne for this aromatic grain, causing consternation among industry leaders and exporters alike.
At the recent Istanbul food fair, renowned as a hub for basmati business, not a single Indian company managed to secure an order for the new basmati crop of any variety. This disappointing outcome was directly attributed to the $1,200 benchmark set by the Indian government. Global buyers, known for their tenacity, resort to strong-arm tactics, holding back payments for orders shipped before the government’s price directive. These buyers also exert pressure on the Indian basmati trade to fulfill contracted orders at previously agreed-upon prices to release payments for consignments already dispatched.
As the former president of the All India Rice Exporters Association puts it, “There were no takers for India’s freshly harvested basmati rice at the International Food Products & Processing Technologies Exhibition in Istanbul, which unfolded from September 6 to 9.”
India boasts diverse basmati rice, including Pusa, Pusa 1401, Pusa 1121, Pusa 1509, and Pusa 1718. Last year, the average FOB (free on board) price for basmati rice hovered around $1,050 per tonne. With orders scarce and the MEP restraining export profitability, exporters find themselves in a tight spot. This predicament has discouraged them from procuring substantial quantities of rice from farmers or maintaining inventory levels.
The imposition of the MEP has inadvertently cast a shadow on India’s prized basmati rice, leaving exporters grappling with the fallout and navigating uncertain waters in the global market.