Since October 2009 India's interest in entering the import market of non-basmati rice has rocked the rice world. There have been public pronouncements of lower production this year of 15-17 million tonnes (as of October 1) due to drought/lower yields , intentions to import on commercial and government-to-government basis, tenders issued but eventually scrapped with an announcement that “as of now” there is no need to import at higher prices.
Price rise
Though no finality has emerged from the Indian side, it has pushed prices of non-basmati rice of prime ‘source origins' — Vietnam, Thailand, Myanmar and Pakistan — by $50/tonne (10 per cent) in less than a month. The Philippines is in the market to buy two million tonnes of rice in December and India's possible emergence as a net importer is being watched keenly.
If status of carry-in stocks is any indication, the need for imports in the near future cannot be ruled out. The factors that may be weighing on the policymakers to delay rice imports could be:
The recent sugar crisis became too hot to handle.
Why create another controversy involving the farming community by importing rice at higher prices.
FCI is busy with procurement of summer crop. Let us see what would “come in” to FCI stocks till December.
There are enough stocks at this point of time.
Let the pressure on prices owing to the Philippines tenders for two million tonnes be over.
A November 22 news report says that the FCI might distribute rice in the open market to cool the domestic prices (that have risen by 15 per cent in a year), and yet the Government is not “eager” to import.
Will be costly
But this “deferral” in decision-making would cost the Government dear. After the Philippines tenders, India will end up paying much higher prices for importing rice. This could lead to intense pressure on the Government to raise the minimum support price (MSP) of paddy and, hence, an increase in rice prices in the domestic market is inevitable. This could mean much higher subsidy for the imported rice.
The tenders by PSUs for 30,000 tonnes, which opened on November 7, were merely to “test the waters”.
Should the Indian imports transpire, Vietnam and Thailand will become the biggest beneficiaries at high prices, while Myanmar and Pakistan will exploit the higher prices to their advantage at other destinations. India, a net exporter and a competitor in the non-basmati rice market two years back, will be a net importer.
Last year it was lower sugar output and the recent storm on FRP (Fair and Remunerative Price) and SAP (State Advised Price) that kept the Government worried; in 2010 it will be the flip-flop rice policy that might snowball into a major controversy, when all indicators of potential shortfall are flashing.
Source : Business Line