Punjab incentives to Basmati millers showing results

The Punjab government's recent decision to continue the incentives given to Basmati rice millers in the state during 2013-14 is bearing fruit, with the price of Basmati in local mandis increasing by Rs 300-Rs 500 a quintal.

The state government had recently agreed to continue incentives to Basmati millers besides slashing market fee and rural development fee by 1 per cent to outside Basmati buyers. (Prior to the decision, Punjab used to charge a mandi fee of two per cent and rural development fee of two per cent)

The government's decision was aimed at getting more buyers to enter Punjab's market to purchase Basmati for safeguarding the interests of Basmati cultivators on one hand and encouraging crop diversification in the state on the other.

"In Haryana, the price of the crop is between Rs 2,650-2,950 a quintal as compared to Rs 1,700-2,900 a quintal in Punjab. Already, many traders from Haryana have entered the Punjab market as the price of the crop is lower than that of Haryana, which has led to an increase in price of the crop," a Haryana trader told Business Standard. (It is pertinent to mention here that 75 per cent of India's Basmati exporters are based in Haryana)

As on October 6, around 499,000 tonnes of Basmati arrived in different mandis of the state, compared to 27000 tonnes during the corresponding period of the last year.

However, the crop is still fetching lower prices for farmers as compared to last year, in anticipation of higher production this year. As against last year's price of Rs 1,850-3,700 a quintal, this year, the price is hovering between Rs 1,700-2,900 a quintal.

"Basmati paddy consumes less water and is a short duration crop. It also fetches more money for farmers. To encourage farmers to grow more Basmati paddy instead of common paddy which is considered to be water guzzling, the government should fix the maximum sale price of Basmati so that farmers' interests are safeguarded," Bhartiya Kissan Union(Lakhowal), Punjab President, Ajmer Singh Lakhowal, told Business Standard.