Given the surplus rice stocks and robust kharif sowing, the government is considering relaxing the restrictions on the grain trade. It may allow increased shipments of rice varieties under government-to-government (G2G) contracts from its stocks and may even lift some of the general export restrictions imposed last year. Besides, additional quantities of rice may be allocated to states.
Sources told FE that a meeting of a group of ministers on measures to deal with surplus rice stock which is currently more than 3.5 times over the buffer would be held soon.
“There are proposals for reduction of surplus rice stocks which is currently pushing up carrying costs for the grain which may reflect in higher food subsidy expenses,” an official said. States are likely to allocate additional rice at subsidized rates in addition to entitlement under the Pradhan Mantri Garib Kalyan Anna Yojana or free ration scheme.
Currently, the Food Corporation of India holds 47.01 million tonnes (MT) — 32.98 MT of rice stocks and 14.12 MT of grain receivable from millers. The stock is against the buffer of 10.25 MT for October 1.
Commerce and Industry Minister Piyush Goyal recently stated that a Group of Ministers will take a call on lifting the ban on certain varieties of non-basmati rice after considering the demand-supply and price situation.
A minimum export price (MEP) of $ 950/tonne was imposed last year on aromatic long-grain Basmati rice which is likely to be reduced, trade sources said.
With overall monsoon rainfall this season till Sunday having been just 1.2% below the benchmark long-period average range, it has given a boost to kharif paddy sowing. Till July 19, 2024, the area under paddy, the most important Kharif crop, was up 6% at 16.6 million hectares on year
With the arrival of paddy for the new season (2024-25) expected to commence on October 1, the government has to initiate steps to reduce the stock in the central pool through open market sales and allow exports of white rice.
The economic cost of rice, including minimum support price (MSP), storage, transportation, and other costs at the beginning of the current fiscal is estimated at Rs 3,975/quintal which may see an increase in surplus rice stock.
The last fiscal open market sale of rice at Rs 29/kg to bulk buyers did not elicit a positive response as only around 0.1 MT of rice was sold. In the current year, the FCI would commence selling rice in the open market to bulk buyers at Rs 28/kg from next month.
The corporation will provide rice at Rs 24/kg to agencies such as farmers’ cooperative Nafed, NCCF, and Kendriya Bhandar for selling the grain at the subsidized rate of Rs 29/kg under the Bharat rice initiative.
Last year, the government had initially banned white rice exports and subsequently imposed a 20% shipment duty on parboiled rice to improve domestic supplies as price rises remained in double digits.
The government, from time to time, allowed rice exports to meet the food security needs of some countries based on request.
Retail rice prices rose 12.15% in June. The inflation in rice prices has been in double digits since October 2022.
Source: MSN
