Pakistani exporters push for lower basmati floor price following India's policy change

Pakistani exporters have asked the government to reduce the floor price for basmati exports, following India's decision to scrap its Minimum Export Price (MEP).

A floor price is the minimum price that can be paid for a commodity in the market, usually set by governments to ensure that the financial viability of the commodity's producers is not threatened.

India and Pakistan are the sole producers of basmati rice.

Chairman of the Rice Exporters Association of Pakistan, Chela Ram Kewlani, highlighted that the current floor price for Pakistani basmati rice stands at $950 per ton. "We recommended last month to lower it to $850 per ton, but the government hasn’t taken a decision yet," Kewlani stated.

He added that global prices for other long-grain rice have also decreased, causing Pakistan to miss out on Indonesian tenders, which are instead being awarded to Burma and Thailand.

Having a higher floor price makes Pakistan's rice exports uncompetitive since producers from other countries are able to offer lower rates to buyers.

Kewlani also emphasized that unless the government reduces the price floor, Pakistani rice exports will struggle to gain momentum.

Meanwhile, India, which had set a MEP of $1,200 per ton last year had earlier reduced it to $950 per ton before scrapping it altogether. The decision aims to assist farmers burdened with debt and rising costs and comes just weeks before the new-season crop arrives, according to a Reuters report.

This policy change is expected to enable India to export basmati rice in larger quantities.

Another Pakistani exporter expressed concern over the impact of India's decision on Pakistan's exports. "India has many varieties, and the removal of the MEP will disrupt the international rice market, affecting Pakistan," he said.

However, he remained hopeful about exporting brown varieties to Europe this year, which could yield better returns for growers and exporters.

In fiscal year 2023-24, Pakistan exported 773,775 tons of rice at an average rate of $1,134 per ton, earning $877 million. In FY23, the country exported 595,617 tons at $1,092 per ton, generating $650.5 million.