Paddy MSP 2026-27 Explained: How Rice Is Priced from Farm to Port

If an offer sheet for Indian rice ever looked disconnected from the paddy price in the news, you are not misreading it. The MSP, the mandi rate and the export quote are three different prices for three different products.

This post lines them up, step by step, so you can read an offer with more confidence. I am Vivek Garg, and this is Part 10 of our Rice Series.

What MSP Actually Is

MSP is a support price for paddy, the unmilled grain. It is not a price for rice. On 13 May 2026, the Cabinet set the 2026-27 MSP at Rs 2,441 per quintal for common paddy and Rs 2,461 for Grade A. Common paddy was Rs 2,369 the year before, so the rise is Rs 72.

Policy since the 2018-19 Budget is to set MSP at no less than 1.5 times the all-India weighted average cost of production. Government agencies buy at MSP when paddy meets the fair average quality (FAQ) specification. Everything else sells at whatever the mandi pays.

From Paddy to Rice

The milling arithmetic

Paddy has to be milled before it can be exported. For custom milling of government-procured paddy, the benchmark outturn is 67 kg of raw rice from 100 kg of paddy. A CAG audit report notes that 2 to 3 per cent driage (moisture loss) is built into that figure.

Divide the MSP by 0.67 and common paddy works out to about Rs 3,643 per quintal of rice, roughly Rs 36.4 per kg. For Grade A, it is about Rs 3,673. That is the paddy cost alone.

It leaves out milling, parboiling, bags, transport, and any income from bran, husk and broken grains. Private mills get different yields by variety and quality, so treat 67% as a benchmark, not as anyone's actual cost.

Why basmati sits outside this

The MSP list covers common and Grade A paddy. Basmati paddy trades at mandi rates. One trade report put new-season 1509 basmati paddy at about Rs 3,650 to 3,750 per quintal in Punjab and Haryana in the week of 22 September 2026. That is roughly Rs 1,200 to 1,300 above the common-paddy MSP, driven by variety, moisture and quality.

The Export Quote

By the time rice reaches a buyer, the price is quoted in dollars per tonne. Reuters reported on 15 October 2026 that Indian 5% broken parboiled rice was at $384 to $389, up from $378 to $384 a week earlier. The 5% broken white rice was at $385 to $390. That is the highest in over a year.

Traders pointed to a stronger rupee and worries about the crop after below-normal rainfall. A Mumbai exporter said domestic paddy was firm because of limited supplies.

Between the farm gate and that quote sit four steps, each adding cost:

• Buying the paddy, at MSP or the mandi rate
• Milling, parboiling and sorting
• Packing and inland haulage to the port
• Port charges and documents

How to Read an Offer

Three habits help:

• Ask where the price stops. FOB and CIF quotes are not comparable until you know which one you have.
• Ask variety and broken percentage. A quote without them is not a price.
• Check the date. These quotes moved week to week in October. If an offer sits far from the numbers above, ask why before you assume it is a bargain.

Figures are as of the dates cited. Confirm current prices before you contract.