Sticky inflation: Govt to assess rice output, consumption

By Sandip Das

With inflation in rice ruling in the double digits since October, 2022 despite the government having a huge surplus stock and restrictions imposed on exports, the food ministry has started a comprehensive assessment to map consumption and production patterns of various high value non-basmati rice varieties in the country.

Officials said that the assessment is expected to identify gaps in demand and supply of various non-basmati white rice varieties such as Sona Masuri, Ponni etc which are not supplied under free ration scheme – Pradhan Mantri Garib Kalyana Anna Yojana (PMGKAY).

“We want to understand whether farmers are producing more common varieties of rice procured by government agencies under minimum support price (MSP) operations against overall demand,” a food ministry official told FE. The official stated that the proposed research is expected to identify whether there is a shift in consumption pattern of high-value non-basmati rice varieties as well as the production of grain.

According to traders, there is a gap between demand and production of major rice varieties which is pushing up overall rice prices. Lack of market data on variety-wise rice production and consumption have been a big challenge.

“We are working out the modalities to launch the assessment of non-basmati rice consumption and production pattern,” an official said.

The government has also initiated measures including selling rice at subsidised rate of Rs 29/kg under the Bharat rice initiative. The government is worried about the inflation in rice, which has been in double digits since the last 19 months. This is despite two third of the country’s population getting free rice under the PMGKAY.

The Food Corporation of India (FCI) attempt to sell subsidised rice at Rs 29/kg under the open market sale scheme to bulk buyers received lukewarm response as traders said quality of rice offered under the sale is not preferred by consumers.

Currently the agriculture ministry does not provide variety wise rice output data at the same time retail inflation is measured on the prices of the commonly used rice variety collected from various consuming points in the country.

Overall cereal inflation in April rose to 8.63% from 8.37% in March, 2024 driven by the rise in rice prices. Retail rice prices rose by 12.51% in April on year.

The rice stocks held by the FCI is currently close to four times the buffer for July 1 despite a 7% fall in procurement in the current season (October-September) compared with the same period last season. Currently, FCI holds 50.2 million tonne (MT) — 31.97 MT of rice stocks and 18.23 MT of grain receivable from millers. The stock is against the buffer of 13.54 MT for July 1.

In addition, officials said FCI so far has received purchase indent for 1.5 MT of rice from the agencies such as Nafed, NCCF and Kendriya Bhandar for selling ‘Bharat’ rice.

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 rise remained in double digits. The government, from time to time, allowed rice exports to meet the food security needs of some countries on the basis of request.

In FY23, India exported a record 22 MT of rice to more than 100 countries and last fiscal because of restrictions on rice shipment, the volume of exports dropped by 27% to 16.34 MT.

India has been the world’s largest exporter of rice since 2012 with more than 40% share in annual global trade of 52-54 MT.

This article has been republished from The Financial Express.