Wednesday, December 03, 2003

EU may ban cheap basmati from Pakistan

Sangita Shah in Mumbai
Published : December 4, 2003

The European Union (EU) has decided in principle to ban the import of low-quality basmati rice from Pakistan, providing a huge opportunity to Indian basmati exporters. The decision, however, has to be ratified by the EU member states.

According to a draft proposal circulated, which will be put to vote shortly, the duty exemption of 250 euros per tonne will henceforth be available only to the traditional basmati varieties, as defined by India.

Most of these varieties are not grown in Pakistan commercially. So Pakistan’s share of the 100,000 tonnes of basmati rice exports to the EU, valued at around $50 million, is up for grabs.

“This will be a victory of sorts for India. Basmati is traditionally of Indian origin and is now being recognised as such,” says Anil Mittal, chairman of the country’s largest basmati rice exporter, KRBL Ltd.

The EU has decided to clamp down on the low-quality rice exported by Pakistan under the ‘higher value-lower duty’ rice exports scheme. Indian basmati rice exporters had been fighting tooth and nail to give the traditional basmati rice its rightful place in the international market.

Expecting the EU ban on Pakistan’s basmati exports, importers had signed purchase agreements for meeting 75 per cent of their requirements from India, exporters said.

The 15-nation bloc, in its draft, proposes to remove Super Basmati rice, which comprises over 80 per cent of Pakistani rice exports, from the duty exemption list.

The Cereals Experts Committee of the EU is scheduled to meet in Brussels tomorrow to approve its draft for the regulation of rice imports by the EU states.

According to the draft to be discussed by the committee, only two varieties of Pakistani rice—Kernel and Basmati 370—will be allowed to be imported by the EU. Both the varieties are not found in Pakistan. So Pakistan has lost the European market.

The EU annually buys around 130,000 tonnes of basmati rice from India, valued at $90-100 million (around Rs 450 crore), and exports of basmati rice from India and Pakistan have been going up significantly since 1995.

The basmati sales by the two countries in the EU has been mainly at the expense of the US’ long-grain rice, which attracts a higher duty.

The EU now produces around 22 lakh tonne of rice and imports 6-7 lakh tonnes, with the US (3.5 lakh tonnet), India (1.5 lakh tonne), Pakistan and Thailand (0.5 lakh tonne each) being the main suppliers.

Both India and Pakistan mainly supply basmati rice, while the US and Thailand export low-premium long-grain varieties.

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