Govt removes MEP on basmati rice, onion; tightens stock limit on wheat

With crucial state elections around the corner, the central government on Friday took a slew of decisions that included lifting the Minimum Export Price (MEP) of basmati rice and onions while at the same time tightening the stock holding limit on wheat.

The MEP of basmati rice was first imposed last year at $1,200 per tonne before it was lowered to $950 per tonne.

However, with basmati rice prices dropping by more than Rs 1,000 per quintal in major growing markets of Haryana and Punjab, farmers have been demanding a lifting of the export cap to boost overseas sales.

Haryana, which goes to the polls in the next few weeks, is a major producer of basmati rice.

For onion, the MEP was fixed at $550 per tonne.

Similarly, in the case of onions, prices have stabilised in the major domestic markets while farmers in poll-bound Maharashtra, where the crop is majorly grown, have been demanding a lifting of the MEP cap.

Globally, there is a shortage of onions, as per some reports, and lifting the MEP will help farmers realise a better price.

The dip in onion prices was, as per some reports, one reason for the below-par performance of the BJP-led Mahayuti government in the 2024 General Elections.

In a related move, the central government has further tightened the limit on stocks of wheat that traders and millers can hold to help boost the grain's availability and moderate prices.

As per the latest order, traders can now hold only 2,000 metric tonnes of wheat against 3,000 metric tonnes earlier, the statement said.

The government has also tightened stock-holding limits for wheat processors.

Its order said that processors can now hold 60 per cent of the monthly installed capacity multiplied by the remaining months of FY25. Earlier, this was 70 per cent of the installed capacity. Processors include biscuit and bread makers.

Wheat prices in the domestic markets have risen to around Rs 2,700 per quintal in the last few weeks due to strong demand ahead of festivals.

However, a section of the industry feels the wheat rates currently prevailing in the country are not overpriced, given that the Minimum Support Price (MSP) has risen sharply in the last few years, while states such as Madhya Pradesh and Rajasthan, which are big producers, have topped it by a bonus of Rs 125 per quintal as per poll promises.