The government is mulling over a new export policy for rice that will, at long last, allow high-value non-basmati rice to be exported,
but within a quantitative ceiling. Fair average quality (FAQ) rice, a politically correct term to describe rice sold through the public distribution system (PDS) will not be allowed to be exported under the blueprint being considered.
This export policy, according to government officials and trade representatives, would be different from the present one in two key respects. One, a limit on the aggregate quantity of rice exports of all varieties (around two million tonnes) would complement the current policy instrument of a minimum export price (MEP). Two, the present system of classifying rice into basmati and non-basmati, and allowing only basmati to be exported, subject to an MEP of $1,000/tonne, would be replaced with a new classification.
The new classification would divide rice grown in India into three categories: exportable basmati, exportable high-value varieties that are comparable in price and quality with exports from countries like Thailand and Vietnam, and non-exportable PDS rice called fair average quality. The exportable high-value varieties would comprise sona masuri, matta, sarbati. The new policy is being considered against a piquant backdrop of bursting foodgrain stocks and the priority need to seamlessly marry food security needs with lucrative trade opportunities.
At a meeting last week with food, PDS and civil supplies minister Sharad Pawar, rice traders were asked for additional inputs and clarifications by the government, which is keen on urgently reworking the foodgrain policy to reflect PDS and welfare priorities as well as export imperatives. Indications from the government are that the new policy could take shape fully by end-June or early July, in time for the key Kharif sowing season which is expected to spell yet another record rice crop on the back of normal monsoon forecast by the IMD. "
As distinct from other attempts, the policy is likely to empower APEDA and not the the empowered Group of Ministers (eGoM) to take decisions on issues such as Minimum Export Price (MEP) imposition, so that it is used as the sole, and quick-reflex, lever to regulate rice outgo in consonance with global trade advantages and the government's domestic foodgrain needs.
This is expected to prevent lengthy time lags on key trade decisions. "The idea is that the government decides on an MEP level, say about $600-700/tonne, which is around the same price at which Thai Jasmine is sold currently, that will ensure that PDS and welfare rice varieties with five per cent brokens remain strictly within the country to be used for the neediest consumers , even as value added rice varieties that command a good price and are in demand in other countries get exported at the right time and price. In turn, this will ensure that the farmer-producer gets a worthy remuneration.
AIREA's Vijay Sethia said: " Rice exporters such as Thailand, Pakistan and Viet Nam have been thanking the Indian government for its prolonged ban on exports because they have gained massively at our expense over the last several months. The MEP imposed by the government, for instance, insured that they were careful to price their produce well below $1,100/tonne. With a new, and by all indications good, harvest in the offing, the government has to come up with a new policy that is beneficial to both farmers and to traders since their relationship is symbiotic."
Basmati varieties, which have been developed as a brand over the years by India, would continue to be exported without specific MEP blocks that allow the advantage to Pakistani rice. The overall quantitative limit for exports is expected to keep sufficient chunk of value-added rice to meet domestic demands as well and ensure o prevent large scale export of lesser quality non-Basmati rice under the guise of high value rice through over invoicing, as done in the past.
Currently, food stocks with the government are around 50 million tonnes, more than twice the storage capacity of the Food Corporation of India, on the back of a 19% higher rice procurement (288.18 lakh tonnes up to May 18) and a record wheat buy (over 221 lakh tonnes).
