[Answered] Examine the reasons behind the government’s decision to impose export curbs and trade controls on rice and wheat, despite record production levels. What are the potential advantages of implementing a uniform MEP (Minimum Export Price) for all rice varieties?

Recently, the Government imposed a ban on wheat exports & rice exports despite production of both rice and wheat hitting all-time highs compared to last year, according to Agricultural Ministry data. Rice rose from 124.37 million tonnes (mt) in 2020-21 to 129.47 mt in 2021-22 and 135.54 mt in 2022-23. Wheat fell from 109.59 mt to 107.74 mt before rising to 112.74 mt in 2022-23.

What are the reasons behind this decision?

• Food security: Ensuring sufficient domestic food supply is a top priority. By restricting exports, the government aims to maintain buffer stocks to safeguard against unforeseen disruptions in production or global supply chains.
• Maintain price stability: Export controls can reduce demand and potential inflation, which can help to stabilize domestic prices. This is crucial to ensuring that the populace can buy staple foods, especially during difficult economic times.
• Weather conditions: India has a high rate of production, but it is still susceptible to climatic changes like drought & climate change that could affect subsequent harvests. Export restrictions aid in reducing this risk and maintain the nation’s food reserves in the event of a production deficit brought on by unfavourable weather.
• Strategic reserves: The government’s ability to respond to situations like natural disasters or unexpected disruptions in the world food supply is ensured by maintaining sizable food reserves, supporting national security.

What are the potential advantages of implementing a uniform MEP for all rice varieties?

• Prevent Quality manipulation: A uniform MEP prevents exporters from downgrading the quality of rice to meet lower MEPs. This maintains fairness and quality standards in the export process.
• Increase exports: A uniform MEP could encourage exporters to explore a wider range of rice & wheat varieties, leading to diversified export offerings. This diversification could open up new markets and trading partners. For eg, rice varieties like Gobindobhog in West Bengal, Kalanamak in eastern Uttar Pradesh’s Terai region, Chak-hao in Manipur, Red Matta in Kerala, and Ponni in Tamil Nadu have unique qualities and specific export markets.
• Protection to farmers: A uniform MEP would protect farmers cultivating non-basmati varieties of rice, especially those varieties that are not sold through PDS & are prone to price fluctuations and trade policy vagaries.
• Reduce administrative burden: A uniform MEP would ease the government’s burden regarding issues related to misclassification or illegal exports of non-basmati masquerading as parboiled or basmati rice.  A uniform MEP would simplify the export process by eliminating the need to calculate and manage MEPs for different rice & wheat varieties.

Conclusion:

A uniform MEP policy coupled with other measures ensures that prices remain under control & inflation is brought down while simultaneously addressing concerns related to any fear of a short supply of cereal in the domestic market.