Trump’s new tariff to affect basmati rice export: Stakeholders

The 26 per cent reciprocal tariff imposed by the US has created a stir in Punjab’s rice industry. As a result, sales have frozen, ongoing deals have been put on hold and shipments are being redirected to other countries for lower prices.

Farmers and rice exporters opine that new tariffs can result in slashed exporter margins and uncertain procurement prices. Apprehensions are that this can benefit Pakistan and US buyers can move towards cheaper alternatives offered by the neighbouring country.

Ajmer Singh Lakhowal, founder president of the Bhartiya Kissan Union (Lakhowal), at a meeting today expressed serious concern that the new tariffs would have a cascading effect on both farmers and traders.

“Farmers from Punjab are already having a difficult time and fighting for their rights. Amidst this, the tariff by the US has come as a blow to the Punjab farmers. Punjab has a share of 40 per cent in the total basmati exports from India. The 26 per cent tariff is being strongly opposed by Europe, Canada and other countries. Prime Minister Narendra Modi has failed to take notice of this important development, impacting traders and farmers,” said Lakhowal.

A rice exporter from the region, Jagdish Singh, said they were being forced to redirect shipments to other countries at lower prices, as ongoing deals with the US buyers had been put on hold which would result in losses to them. US buyers want the sellers to bear the 26 per cent import duty as the US market is unable to absorb the overnight increase.

He added that the situation could benefit Pakistan as the farmers there had small land holdings and they did not use pesticides and, hence, rice was cheap. “We fear importers can shift to Pakistan for it is a cheaper alternative as its currency is already devalued against the US dollar,” he said.

Ranjit Singh, vice-president, Basmati Rice Miller and Exporter Association, said clash had already started between exporters and buyers after the new tariff implementation and deals have been put on hold as of now.

Vice-Chancellor of Punjab Agricultural University, Dr SS Gosal, said, “Any new tax imposition directly affected the buyer and the consumer. India should also increase its import duty on certain goods like canola oil so that the imports are curtailed and home-made products are used in the local market.”

Dr JM Singh, head of department of economics at the PAU, said it’s too early to say anything, but the general trend that was observed whenever export duty was increased was that it resulted in slash in exports, and as a result, the product was available in large quantity in the local market, which further led to the decrease of prices in the local market.

Punjab