NEW DELHI: The delay in advanced crop output estimates for the kharif season has raised fears that the decline in rice output this season could be beyond the government projection of 10 million tonne, forcing India to resort to imports.
Though the new rice marketing season began with over 285 lakh tonne of wheat and 160 lakh tonne of rice stocks, well above the minimum buffer norm of 110 lakh tonne of wheat and 52 lakh tonne for rice, the market is sensitive to shortage signals.
“It got spooked after several nervous decisions of the government such as delaying the advance estimates on crop output, extension of stock holding limits by traders and continuing with the export ban on non-premium rice,” a commodity analyst said, requesting anonymity. The advance estimates are usually released in September but the Centre is yet to get all the paddy acreage inputs from states this year.
Traders expect India to import 2-5 million tonne of rice. Sources say a proposal to scrap the 70% import duty on rice to facilitate increased non-premium rice imports is already under consideration. Commerce minister Anand Sharma had, however, late last month denied any such move though an empowered group of ministers had cleared it in early September. Food minister Sharad Pawar too had indicated imports would be effected if necessary.
India’s rice production is projected to drop from 99 million tonnes in 2008 to 89 million tonnes this year. However, a United States Department of Agriculture (USDA) report pegged the shortfall in India’s rice output as high as 17 million tonnes.
India’s annual rice consumption is about 86 million tonnes but an over 10-million-tonne output drop in the 2009-10 marketing year, started October 1, would increase the pressure on the government’s existing stocks and also tend to push up open market prices. Besides, a marginal output drop is seen in Punjab while Andhra Pradesh, another big producer (output 12 million tonnes of rice last year), is also expected to see a shortfall this year.
Indeed, retail prices are already up 14% over the last year. The shortfall could also make it difficult for the government to buy enough rice for its welfare and PDS priorities in a drought year at the current minimum support price (MSP).
“The government will try to meet some of its welfare foodgrain needs with the satisfactory wheat stocks it has. But that will not be enough. We estimate that anywhere between 2-5 million tonnes, definitely 2 million tonnes at least, of rice will need to be imported to meet domestic needs,” a prominent Delhi-based rice exporter told ET.
The empowered group of ministers or EGoM had early last month taken the controversial decision of easing exports of basmati and other premium rice varieties priced over $900/tonne despite a possible drought-fuelled shortage in production this season.
Apparently, while allowing exports , the Centre wants the private sector to import at least twice the non-basmati rice (around $375/tonne for 25% brokens from Vietnam currently) for every tonne of basmati exported so that domestic supply would be ample and retail price held in check.
Source : The Economic Times