Editorial: Boost for Basmati farmers
The decision to remove MEP will help India export basmati rice in large quantities and ensure good returns to farmers
Basmati — the premium long-grain rice variety famed for its aroma — is uniquely Indian and consistently enjoys dominance in the international consumer market. India is the world’s largest basmati producer — 6.5 million tonnes annually — and exports around 5 million tonnes yearly, primarily to the European, Middle-Eastern and North American markets. The Centre’s recent decision to do away with the Minimum Export Price (MEP) for basmati rice is a welcome move as it provides much-needed relief to the farmers and will help boost the country’s share in the global premium rice market. Basmati farmers have been grappling with rising production costs and debts on the one hand and growing competitiveness in the international markets on the other. They have been demanding the easing of the floor price restrictions so that they can compete in the international markets more effectively. Last year, the Centre set an MEP of $1,200 a tonne and later cut it to $950 a tonne. As supplies picked up since then, exporters urged the government to either cut or remove the MEP to ensure farmers do not get saddled with large stocks when the new crop arrives in a month. The decision to remove the MEP will help India export basmati rice in large quantities and ensure good returns to farmers. The move also marks a significant shift in the country’s agricultural and export strategy. As the new basmati crop season approaches, this timely policy adjustment could be a game-changer for both exporters and farmers.
Historically, India has set a floor price for basmati rice exports to ensure premium pricing in international markets. However, the previous floor prices placed Indian exporters at a disadvantage in a highly competitive global market. With Pakistan as the only other major producer of basmati rice, the price floor restricted India’s ability to compete effectively on price, particularly in key markets such as Iran, Saudi Arabia, the United States and Europe. The removal of the MEP addresses this issue directly, allowing India to export basmati rice at more competitive rates. Without the burden of surplus stocks from the previous season, farmers can now expect smoother sales and better prices for their produce. The timing is particularly important because farmers have been dealing with increased input costs, especially for fuel and fertilizers, which have eaten into their profits. India’s decision also reflects a larger strategy to regain its share in the international basmati market. The country has long held a dominant position in the premium rice sector, thanks to the unique qualities of its basmati varieties. However, price constraints have limited its ability to capitalise on global demand fully. By eliminating the MEP, India can now cater to a broader range of buyers, particularly those seeking more affordable basmati varieties priced at around $700 per tonne.
