Pak basmati export floor price higher than India

NEW DELHI: Taking a leaf out of India’s book, Pakistan has decided to impose a minimum export price (MEP) of $1,500/tonne on fine quality basmati. As there is no export tax, the entire gain from Islamabad’s new price table will be pocketed by private exporters. That has further miffed Indian rice companies, who are already peeved at having to share their profits with the government through a new export tax.

According to a circular issued by the Rice Exporters’ Association of Pakistan, super basmati will have an MEP of $1,500/tonne, basmati $1,300/tonne, long grain rice $1,000/tonne and irri-6 $750/tonne. There will be no ban or export tax on rice.

India last week imposed an export tax of $200/tonne on basmati after reducing the MEP to $1,000/tonne from $,1200/tonne. The move was essential to partly recover the shortfall in government revenue after import duties were reduced to zero on several big-ticket items, including edible oils.

Indian basmati exporters had lobbied for an increase in MEP, with the export tax loaded on top as an extra. That would have ensured ample profits for them in a short-supplied market, where the foreign buyer would have been forced to also pay export tax. “We wanted an MEP that is $400/tonne above the Thai price for 25% broken rice,’’ said an industry player.

Since that proposal did not cut ice with the government, Indian exporters are busy re-negotiating their contracts once again to factor in the export tax. “At least the contracts already registered with the Agricultural and Processed Food Products Export Development Authority (Apeda) should be allowed to despatch. How many times can one re-work the same contract,’’ he added.

Though exporters say their foreign buyers would be unforgiving and Indian farmers would lose out on a profitable market next year, the problem may not reach such epic proportions. While older contracts are certainly facing rough weather, new contracts are unlikely to be problematic. “Some confusion will be there, given evolving government policy. But now that the policy is fixed, things should settle down. It’s a seller’s market. Indian exporters know they are sitting on a pot of gold. This is the time for India’s luxury food item to take pride in helping re-fill the exchequer,” a market watcher said.