New Delhi: The commerce ministry may reduce the minimum export price (MEP) of non-basmati rice after exports failed to pick up, said a ministry official who declined to be named. The government had allowed limited exports of non-basmati rice after a bumper crop in 2010-11.
India had banned exports of rice, except the costlier basmati variety, to beef up supplies in the domestic market and cool down soaring prices in April 2008. An empowered group of ministers (eGoM) on food, headed by finance minister Pranab Mukherjee had decided in February to permit export of three premium varieties of non-basmati rice this year, ending a three-year ban. While the government allowed the export of 100,000 tonnes of sona masuri, 25,000 tonnes of Ponni Samba and another 25,000 tonnes of Matta, only 30,000, 6,500 and 3,000 tonnes, respectively, of the three varieties have been exported this year so far.
The official said the main reason for languishing exports is the high MEP of $850 per tonne (around Rs 38,000). “We are currently working on a lower MEP which will allow traders to export higher quantities of non-basmati rice,” the official said.
The current MEP is very high given the rice production, said Chowda Reddy, manager of commodity research at JRG Wealth Management. “The government should ideally reduce the MEP as rice production has gone up and domestic price has come down to $400-450 range,” he said.
The government dithering on procedural matters, even after allowing exports, also hampered exports, said D.N. Pathak, executive director of the All India Rice Exporters Association. “It took three weeks to issue procedures after the initial notification in which it again forgot to mention the MEP,” Pathak said. “Initially, it mandated Agmark certification. After the agency expressed its inability to provide any such certification for non-basmati rice, it took the government one and half months to waive the quality certificate requirement.”
One of the reasons for the government not allowing export of foodgrains, including rice, from its buffer stock is the proposed food security Bill. The National Advisory Council headed by the United Progressive Alliance (UPA) chief Sonia Gandhi, has suggested providing a legal entitlement to 75% of the population, including both “priority” and “general” household categories. However, the Rangarajan panel has raised concerns over the availability of foodgrains, if a large number of beneficiaries are covered under the proposed law. Currently, the government supplies 35kg of rice and wheat every month at subsidized rates to 65.2 million poor families through ration shops.
Rice production in India would rise to 94 million tonnes (mt) in 2010-11 crop year from 89 mt in the previous year, according to the estimates of the agriculture ministry. Foodgrains (rice and wheat) stocks held by the Food Corporation of India and state agencies were 45.88 mt as on 1 March.
Robert Zeigler, director general of the International Rice Research Institute had said last month that the global rice harvest this year is expected to be just enough to meet demand. Output is estimated at 450-460 mt in 2011-2012, while demand is forecast at 450 mt, Zeigler had said.
Reuters contributed to this story.