New Delhi: In a move aimed at discouraging rice exports, the Centre plans to further raise the minimum export price (MEP) of non-basmati shipments. This comes even as the country’s rice production is said to have touched an all-time high of 94.08 million tonnes (mt), going by the Agriculture Ministry’s ‘second advance’ estimate for 2007-08 released on Thursday.
“There is a proposal to hike the MEP from the present $500 a tonne free-on-board (f.o.b.) level. The exact figure is to be decided, but it could even be in the $600-plus range,” highly placed sources told Business Line.
The Centre had originally banned all non-basmati rice exports with effect from October 9. However, following complaints from exporters, who represented that the ‘non-basmati’ category covered a whole gamut of premium varieties not procured for the public distribution system (PDS), the blanket ban was replaced by an MEP of $425 (Rs 17,000) a tonne f.o.b. from October 31. The latter was subsequently increased to $500 (Rs 20,000) a tonne effective from December 27.
Concern over availability
But with international prices shooting up, there is renewed official concern over exports undermining domestic rice availability. Since the start of the current calendar year, prices of 100 per cent Thai grade B rice have increased from $375 to over $450 a tonne f.o.b.
“The Government is particularly worried about exports of long-grain varieties such as PR-106, which are procured for the PDS and are currently being shipped out at $550-600 a tonne f.o.b. There is a market for Indian long-grain in countries such as Saudi Arabia, which has announced a subsidy of $250 a tonne on rice imports into the country,” the sources noted.
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According to them, since October, about 80,000 tonnes of PR-106 has been shipped out to Saudi Arabia and the figure could cross 200,000 tonnes by September. These are mainly taking place through the Kandla and Mundra ports. “With a $250 a tonne import subsidy, an MEP of $500 a tonne becomes meaningless. While Thai long-grain rice is selling cheaper at about $450 a tonne, there is a marked preference for Indian long-grain varieties in West Asia,” the sources added.
Premium varieties
But the problem in hiking the MEP further is that it could hit exports of ‘Ponni’, ‘Red Matta’ and other such premium non-basmati varieties that are not procured for the PDS. Further, these basically cater to niche overseas Indian markets in the US, West Asia, Malaysia and Singapore. ‘Ponni’ rice, for example, is currently going at $550-600 f.o.b.
“A fine balance will have to be struck between discouraging exports, while not hampering shipments of PDS non-compatible grain. But in an election year, the Government’s worries over inflation and domestic availability obviously override all other concerns. And neither does the market take the Agriculture Ministry’s claims of a record crop very seriously,” the sources pointed out.
Currently, basmati-grade varieties from India are quoting (per tonne cost & freight, West Asia) at $1,550 for traditional (CSR-30) par-boiled and $1,850-1,900 for traditional raw, while correspondingly ruling at $1,400-1,600 for Pusa Basmati-1 and Pusa-1121.
One-year-old aged raw Pusa-1121 is fetching up to $1,800 a tonne. Prices of Sharbati, too, are ruling between $850 and $950 a tonne, depending on whether the consignment is of par-boiled or raw.
“There is a proposal to hike the MEP from the present $500 a tonne free-on-board (f.o.b.) level. The exact figure is to be decided, but it could even be in the $600-plus range,” highly placed sources told Business Line.
The Centre had originally banned all non-basmati rice exports with effect from October 9. However, following complaints from exporters, who represented that the ‘non-basmati’ category covered a whole gamut of premium varieties not procured for the public distribution system (PDS), the blanket ban was replaced by an MEP of $425 (Rs 17,000) a tonne f.o.b. from October 31. The latter was subsequently increased to $500 (Rs 20,000) a tonne effective from December 27.
Concern over availability
But with international prices shooting up, there is renewed official concern over exports undermining domestic rice availability. Since the start of the current calendar year, prices of 100 per cent Thai grade B rice have increased from $375 to over $450 a tonne f.o.b.
“The Government is particularly worried about exports of long-grain varieties such as PR-106, which are procured for the PDS and are currently being shipped out at $550-600 a tonne f.o.b. There is a market for Indian long-grain in countries such as Saudi Arabia, which has announced a subsidy of $250 a tonne on rice imports into the country,” the sources noted.
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According to them, since October, about 80,000 tonnes of PR-106 has been shipped out to Saudi Arabia and the figure could cross 200,000 tonnes by September. These are mainly taking place through the Kandla and Mundra ports. “With a $250 a tonne import subsidy, an MEP of $500 a tonne becomes meaningless. While Thai long-grain rice is selling cheaper at about $450 a tonne, there is a marked preference for Indian long-grain varieties in West Asia,” the sources added.
Premium varieties
But the problem in hiking the MEP further is that it could hit exports of ‘Ponni’, ‘Red Matta’ and other such premium non-basmati varieties that are not procured for the PDS. Further, these basically cater to niche overseas Indian markets in the US, West Asia, Malaysia and Singapore. ‘Ponni’ rice, for example, is currently going at $550-600 f.o.b.
“A fine balance will have to be struck between discouraging exports, while not hampering shipments of PDS non-compatible grain. But in an election year, the Government’s worries over inflation and domestic availability obviously override all other concerns. And neither does the market take the Agriculture Ministry’s claims of a record crop very seriously,” the sources pointed out.
Currently, basmati-grade varieties from India are quoting (per tonne cost & freight, West Asia) at $1,550 for traditional (CSR-30) par-boiled and $1,850-1,900 for traditional raw, while correspondingly ruling at $1,400-1,600 for Pusa Basmati-1 and Pusa-1121.
One-year-old aged raw Pusa-1121 is fetching up to $1,800 a tonne. Prices of Sharbati, too, are ruling between $850 and $950 a tonne, depending on whether the consignment is of par-boiled or raw.
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