Rice stocks with FCI surge to 10-year high
By Sandip Das
Rice stocks with the Food Corporation of India (FCI) have risen to a 10-year high of 36.3 million tonne (MT), 2.5 times more than the buffer.
This has caused concerns that the economic costs of public distribution system (PDS) operations will flare up, causing a further rise in the food subsidy bill. What compounds the problem is the paddy procurement for the 2025-26 season (October-September) is set to start.
Reasons behind record rice stocks and storage concerns
Officials attribute high procurement and robust crop output are the key reasons behind the stocks being high.
Sources told FE that annually the FCI and state agencies purchase around 52 MT to 53 MT of rice from farmers under minimum support price (MSP) while the corporation supplies around 36 to 38 MT of rice for the Pradhan Mantri Garib Kalyan Anna Yojana (PMGKAY) or free ration scheme.
“The rice stocks are set to rise further with the commencement of paddy procurement by FCI and state agencies for 2025-26 season,” an official said.
At present, FCI holds 36.28 MT of rice against the buffer of 10.25 MT for October 1. This stock excludes close to 10 MT of rice yet to be receivable from the millers.
Rising economic cost
The high rice stocks are despite brisk offloading of grain through open market sale, allocation to states, and for ethanol manufacturing and Bharat rice initiative. Open mark sales this year is likely to surpass last fiscal year’s record sale of 4.63 MT.
According to sources, over 4.2 MT of rice from the FCI stocks have been offloaded in 2025-26 so far at subsidised rates through various initiatives such as ethanol manufacturing, state government welfare schemes and Bharat rice initiative.
For the government, the economic cost of rice, including MSP, storage, transportation and other costs at the beginning of the current fiscal was estimated at Rs 41.73/kg which may see an increase due to surplus rice stock.
Meanwhile wheat inventories reached a four-year peak at 32.26 MT against a buffer of 20.52 MT.
While procurement of wheat will commence from April 1 for the 2026-27 marketing season (April-June), the surplus stock would help the government offload stock in the open market in the next six months for curbing rise in prices.
The government has set a rice procurement target of 46.35 MT for the 2025-26 kharif season, slightly lower than last year. Punjab and Haryana have commenced procurement last month although officially MSP purchase from the farmers for 2025-26 season commences on October 1.
In the 2024-25 season, FCI and state agencies have purchased 54.49 MT — 47.38 MT (kharif) and 7.1 MT (rabi) — of rice equivalent to paddy from farmers at the minimum support price (MSP).
Punjab, Haryana, Madhya Pradesh, Chhattisgarh, Odisha, Andhra Pradesh and Telangana contribute majority to the paddy purchase drive by the government agencies.
After procurement by the FCI and state agencies, paddy is handed over to millers for conversion into rice. The paddy-to-rice conversion ratio is 67%.
This article has been republished from The Financial Express.