Why minimum export price on Basmati rice may have minimal impact

The government's minimum export price on Basmati rice will have a minimal impact on exporters since stock levels are usually higher in the first part of of the harvest season, according to one of India's largest rice millers. Since the harvest season for Basmati rice spans October to December, stock levels tend to peak in December and then gradually decrease, Ashish Jain, the chief finance officer at rice miller KRBL Ltd., told BQ prime in a recent interview. This lessens the immediate impact on the industry, including KRBL, he said.

The government on Sunday imposed a 20% export duty on parboiled rice—rice partially boiled with husk. It also imposed a minimum export price of $1,200 (about Rs 99,000) per tonne for Basmati rice. The minimum export price is aimed at ensuring food security, Jain and Ashwani Arora, managing director at LT Foods Ltd., said. There are concerns about a projected 5% shortage in rice stocks for the coming year, Jain said. Based on data from APEDA, the average price per tonne of Basmati in June 2023 was $1,100.

Several factors have contributed to a rise in the price of rice, according to Jain. While global production forecasts by various monitoring bodies raised concerns, major rice exporters like Thailand and Vietnam faced challenges due to the El Nino impact on their crops, he said. As for LT Food Corp, the impact will be relatively minimal as a significant portion of their exports, including Daawat brand rice, are priced above the MEP, Arora said. The companies are also awaiting clarification on how previously booked orders below the MEP will be handled and if there will be changes for exports already at the port.