Earlier this month, the Centre rightly removed the minimum export price of $950 a tonne, imposed last October, on basmati rice. Now, it is time that export curbs — from MEP to an outright ban — on various forms of non-basmati rice (white rice, parboiled rice and brokens) are seriously reviewed. The situation now with respect to rice output and inventories does not seem to justify curbs on exports.
The US Department of Agriculture’s September outlook on India’s rice crop for 2024-25pegs it at 139 million tonnes, against the Centre’s final estimates of 138 million tonnes in 2023-24. The kharif procurement target for rice has been pegged 5 per cent higher than last year at 48.5 million tonnes. This implies that the inventories of rice with the Food Corporation of India may exceed the January 1, 2024 level of 18 million tonnes at the start of the new calendar year. This sense of comfort did not exist a year back. Even if domestic demand (PDS and retail) is generously estimated at 110 million tonnes (ICRA assessment) and exports at above 20 million tonnes (including about six million tonnes of basmati), there would be a surplus of 8-10 million tonnes, without including stocks with FCI.
It was different a year ago. A flurry of export curbs was introduced in mid-2023 (export of broken rice was banned in September 2022) after rice stocks on January 1, 2023 were just 12 million tonnes, against 22 million tonnes a year before that. Meanwhile global rice prices were firming up as El Nino had impacted the rice crop in various South East Asian countries. An export-driven shortfall was perhaps feared, as it was not clear how India’s rice crop would fare in these circumstances. The Centre clamped down, and rightly so too. Fearing inflation, a 20 per cent export duty was imposed on parboiled rice (about 45 per cent of total non-basmati rice exports of 17 million tonnes in FY23) in August 2023. Non-basmati white rice exports (6.3 million tonnes in FY23) were banned in July 2023. Surprisingly, MEP was introduced on basmati in August 2023. Here, the reason was not to control prices, but to curb “misclassification and illegal export of non-basmati white rice”. Now, basmati MEP has been discontinued, while global rice prices continue to rule firm this year – in other words, the incentive to ‘divert’ non-basmati rice remains. With output looking good, the Centre should relax its levies and bans. That would help exporters and farmers, without pushing up prices.
In FY24, it was a case of consumers, traders and producers being hurt, even as the crop finally turned out to be comfortable. Non-basmati rice exports were down to 11 million tonnes in FY24, against over 17 million tonnes the previous year, and yet cereals inflation was elevated. According to Economic Survey 2023-24, cereals contributed to a third of the 7.5 per cent food inflation last fiscal. That trend continues into this year. Clearly, there are other forces at work — not exports — that need to be understood.