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The government’s removal of the Minimum Export Price on non-basmati rice boosts export potential and income for farmers and exporters.
In a significant move, the Indian government has removed the Minimum Export Price (MEP) for non-basmati rice. This decision follows the recent lifting of the export ban on non-basmati rice and is expected to boost the export market. Along with this, export duties on parboiled and husked brown rice have also been removed. Last month, these duties were reduced from 20% to 10%.
The removal of MEP is likely to open up more opportunities for farmers and rice exporters, increasing the export volumes and, in turn, benefiting the rice-growing community.
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The Minimum Export Price (MEP) was a set rate, previously at $490 per tonne, below which exporters could not sell non-basmati white rice internationally. By removing this restriction, the government has enabled the exporters to sell rice at more competitive prices, which may lead to increased export demand.
For farmers, this means the possibility of higher earnings, as higher exports can drive up the demand for paddy within India, benefiting the rice producers across major agriculture states.
The Directorate General of Foreign Trade (DGFT) issued a notification stating the MEP removal of non-basmati white rice. With this change, exporters can now sell rice internationally without adhering to a minimum price, encouraging more sales.
While this move is positive for exporters, it could also have an impact on the domestic rice prices. With more rice going abroad, supply within India may reduce slightly, which could lead to a rise in domestic prices. However, this price rise may benefit farmers by offering them better rates for their paddy. Additionally, shipments that were previously halted can now proceed, saving traders on storage costs and increasing the overall profit margins.
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As of the latest data from Commodity Online Mandi, the average price of paddy in Indian markets stands at ₹2,273.24 per quintal. Prices can range from as low as ₹1,500 per quintal to as high as ₹3,625 per quintal, depending on factors like quality and region.
For the 2024-25 fiscal year, the government has increased the Minimum Support Price (MSP) for paddy. The MSP for the standard paddy variety is set at ₹2,300 per quintal, and for grade-A paddy, it’s ₹2,320 per quintal. This is a rise of ₹117 from the previous year, where normal paddy was priced at ₹2,183 and grade A at ₹2,203.
India ranks as the second-largest rice producer globally and is also a major rice exporter. Key rice-producing states include Punjab, West Bengal, Uttar Pradesh, Tamil Nadu, Andhra Pradesh, Odisha, and Telangana. These states contribute about 72% of India’s total rice production. According to the latest Economic Review Report, Telangana has emerged as the top paddy producer in 2024, surpassing West Bengal and Uttar Pradesh.
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With the removal of the MEP on non-basmati rice, farmers and exporters can now look forward to greater opportunities and income, marking a positive turn in the agricultural sector.
The removal of the MEP on non-basmati rice is a significant win for Indian farmers and exporters. This decision will boost exports, potentially raise local prices, and also bring increased profits to the agricultural sector, especially rice-producing states while supporting the government’s goal of enhancing farmer incomes and export competitiveness.