Exporter body divided over setting price benchmark at $425

Exporter body divided over setting price benchmark at $425

Indian rice exporters might get a breather if the decision to exempt superior categories of rice from the blanket ban on non-basmati rice export is passed by the cabinet following a separate meeting on 23 October between Sharad Pawar, minister for agriculture, Kamal Nath, minister for commerce and Bhupinder Singh Hooda, chief minister of Haryana, where the decision to give certain concessions to exporters was taken.

Mint had reported the government was considering a rollback of the ban on 23 October in a front page story.

Under the concession, rice consignments worth a minimum of $425 (about Rs16,830, freight on board) per tonne, will be allowed for export. A decision to set the minimum export price (MEP) at $425, however, has created a rift within the All India Rice Exporters Association (Airea).

“This doesn’t help us at all. This is just going to push honest exporters into dishonest business. This only helps exporters who export superior quality of non-basmati as well as basmati. Exporters can simply over-invoice the consignment and ship it out," insisted Anil Monga, managing director, Emmsons International Ltd, a leading non-basmati rice exporter. “The Airea seems to be speaking only for the basmati exporters whereas we are right now still in the lurch."

The association has been asking for an MEP of $400 since the ban.

“We are happy with the $425 MEP, which will help resolve a lot of problems. But, we are still appealing for the government to allow the large consignments of rice lying at ports to be exported," said Vijay Setia, president, Airea.

An MEP of $425 will allow varieties such as Pusa-1121 and Sharbati to be exported, while common grade rice will not make the cut. The blanket ban on non-basmati rice was announced to control price rise and help the Food Corporation of India procure this year’s target of rice for the public distribution system.

“The reason we recommended $400 is because we calculated it using last year’s data and saw that setting it at $400 would take care of our as well as the government’s concerns," added Setia.

“The actual MEP, however, will be lower if you take into account all the RBI concessions of commission, rejection, packaging, etc. So, effectively, the actual MEP could be up to 20% less than $425," said a trader, who did not wish to be identified. The decision to set an MEP is likely to be taken at a cabinet meeting today (25 October).