In recognition of the importance of assuring reasonable produce prices to the farmers, motivating them to adopt improved technology and to promote investment by them in farm enterprises, the Agricultural Prices Commission (Currently known as the Commission for Agricultural Costs and Prices) was established in 1965 for advising the Government on agricultural prices policy on a continuing basis. The thrust of the policy in 1965 was to evolve a balanced and integrated structure to meet the overall needs of the economy and with due regard to the interests of the producers and the consumers.

The minimum support prices are announced by the Govt. of India with a view to ensuring remunerative prices to the farmers for their produce on the basis of the Commission for Agricultural Costs and Prices (CACP) recommendations. The minimum support prices are perceived by the farmers as a guarantee price for their produce from the Government. These prices are announced by the Government at the commencement of the season to enable them to pursue their efforts with the assurance that the prices would not be allowed to fall below the level fixed by the Govt. Such minimum support prices are fixed at incentive level, so as to induce the farmers to make capital investment for the improvement of their farm and to motivate them to adopt improved crop production technologies to step up their production and thereby their net income.

The minimum support price for paddy for Fair Average Quality (Common) is fixed by the govt. each year on the basis of the recommendation of the Commission for Agricultural Costs and Prices, Procurement/Minimum Support Prices fixed for the Paddy (Common) for the last five years are given below :-

India is facing stiff competition in the world market for export of rice. Thailand, the world’s largest rice exporter has steadily increased its share of the African market. Thailand is exporting rice to three large African buyers viz.- Nigeria, Senegal and South Africa. Vietnam is the world's second largest supplier of rice. Currently the demand for Vietnamese rice has steeply declined in the International market. The fall in demand is due to good crop in Vietnam's main Asian markets like Indonesia etc.

Thailand, India and U.S.A. are the only countries making parboiled rice and exporting. Thailand, Vietnam and India are also exporting 100% broken rice.

A decade ago, India used to export only Basmati rice. Non-Basmati rice has also become a major item for export, registering a steady upwards trend in recent years. During 1998-99, total quantity of rice exported was 49.40 lakh tonnes, out of which 43.40 lakh tonnes was non-basmati and 6.00 lakh tonnes was basmati respectively. The total exports of rice during 1999-2000 was estimated at 18.23 lakh tonnes, decline of around 65% from 49.40 lakh tonnes, exported during 1998-99, the export of non-basmati varieties of rice constitute close to three-fourth of the total rice exported. However, in monetary terms, the basmati varieties bring in more foreign exchange than non-basmati varieties of rice. Basmati rices are fetching good export prices in the International Markets for its three distinct quality features viz.-pleasant aroma, superfine grains and extreme grain elongation. Therefore, nearly two third of basmati rice produced in India is exported. The middle East Africa, CIS, America, France, Australia and Britain are the countries importing basmati rice from India.

In the 80's much of Indian basmati rice had gone to the then USSR and less quantities exported to among other countries. The export to the then USSR by the end of 80's decreased slightly, while the share of other countries particularly to Saudi Arabia had increased significantly. The Indian basmati rice was exported to Saudi Arabia in considerable quantities by the end of 1997-98 and the share of CIS (USSR) had gone down significantly. Thus, the share of Gulf countries as a whole has increased significantly over the years.

The export earnings from the export of total rice (Basmati and Non-Basmati) during 1998-99 was worth Rs. 6,200.80 crores, which accounts for 4.38% of total national export earnings of Rs. 1,41,603.53 crores. The total earning from Basmati rice during 1998-99 was Rs. 1,886.25 crores, which accounts 1.33% of total national export earnings. Similarly, export earnings from agricultural exports during 1998-99 was Rs. 25,224.63 crores, which accounts for 17.81% of total national export earnings. The percentage share of rice exports to the total agricultural exports during 1998-99 was 24.58% in which the share of basmati rice was 7.5% during the same year. The percentage share of Basmati rice to the total rice exports during 1998-99 was 32.42%. Percentage share of export of rice from India during 1998-99 is given in Table-7.

Rice export constitute a considerable share in the national exports in general and in agricultural exports in particular keeping in view the importance of rice in the export of the national items, efforts are required to be made to increase the export of rice for the development of the nation. There is a good scope for India to take advantage of the new trade opportunities for sustaining the export of rice. This can be achieved if production is made keeping in view the demand of International markets by increased investment in Research & Development coupled with realistic policy incentives adopted by the Government. The following are few of the measures suggested to sustain the export of rice in future.

1. The major rice producing nations have decreased the price to capture the International markets in order to export huge stocks to the maximum possible extent. Indian rice prices are inelastic due to relatively high cost of production. Much of basmati export prospects have been lost in the recent past to other competing countries like Pakistan etc. because of high domestic prices. Pakistan’s prices are very low compared to Indian basmati rice prices and that is why more than 70 per cent share of the world’s basmati market has been captured by Pakistan. In fact, Indian basmati rice is superior to Pakistan basmati rice but due to higher price, buyers are not ready to pay the big difference in prices. Therefore, low cost technology may be developed to reduce the cost of production thereby making the Indian rice compete in the International markets.

2. Breeding programme may be initiated to develop high-yielding export–quality rice (Basmati, Non-Basmati, Short Grain Scented Rice, etc.) to enable the exporters to sustain their exports in future.

3. Survey may be conducted to identify the suitable belts/zones for cultivation of export quality rice.

4. Cultivators may be apprised about the advanced production technology through extension activities for better production so that quality standards can be maintained to match those of International markets.

5. Proper arrangements may be made for procurement and processing of rice for export purposes keeping in view the requirement of International markets.

6. Developmental activities may be strengthened to back up the rice industries, production of quality seeds and making available to the farmers at subsidized rates.

7. Post-harvest care may be taken in a effective manner so that export–quality could be maintained. Rice mills may also be modernized to ensure high milling recovery and effective availability of by–products for economic utilization.