HomeBusinessRice prices may remain elevated due to fall in Kharif production

Rice prices may remain elevated due to fall in Kharif production

Irregular rains in June-September and delayed southwest monsoon rains have raised concerns over the paddy crop.

Irregular rains in June-September and delayed southwest monsoon rains have raised concerns over the paddy crop.

Rice prices are likely to remain elevated due to a reduction in rice production by 6-7 million tonnes due to a fall in paddy sown area, adding to the inflationary pressures that the slowing economy is already grappling with.

Retail inflation had reversed a three-month downward trend to 7% in August on higher food prices, including cereals.

Similarly, wholesale price inflation, which eased to an 11-month low, also showed pressure on grain prices as a result of wheat production being hit by severe heat waves in some parts of the country.

Moreover, the expectation of lower paddy production – conservative as per government estimates and higher if outside experts are to be believed – will keep inflation expectations high, believe experts and analysts.

Irregular rains in June-September and delayed southwest monsoon rains have raised concerns over the paddy crop.

India’s rice production during the crop year 2021-22 ended June stood at a record 130.29 million tonnes (MT) against 124.37 MT in the previous year. The food ministry has estimated a fall in rice production by 6-7 MT during this year’s kharif season, which is 85% of the country’s total rice production.

However, some believe that there is nothing to panic as of now and the buffer stock that India has is enough to meet the demand of the Public Distribution System (PDS).

Also, government intervention in the form of banning the export of broken rice and imposing 20% ​​duty on the export of non-basmati and non-par boiled rice would help control the situation.

These restrictions have been imposed due to the increase in the price of rice and animal feed in the last one year.

According to data maintained by the consumer affairs ministry, the wholesale price rose 10.7 per cent to Rs 3,357.2 per quintal on September 14, from Rs 3,047.32 per quintal a year ago. The retail price rose by 9.47% to ₹38.15 per kg from ₹34.85 per kg.

An article published in the RBI’s latest bulletin said “there has been a resurgence of food price pressures, mainly stemming from cereals, even as fuel and core components have provided modest measure of relief.” ” The uneven spatial distribution of rainfall in September has triggered a rise in prices of key vegetables, especially tomatoes.

“On the food front, furthermore, we need to be prepared for the impact of the expected delayed withdrawal of monsoon,” the RBI article said.

Inflation pressure in India is easing with a pre-emptive set of administrative measures by the government, tight monetary policy and easing of international commodity prices and supply-chain, said a monthly economic review released by the Finance Ministry on Saturday. hindrances

However, it cautioned, “There is no room for complacency on the inflation front as low crop-sowing for the kharif season would jeopardize agricultural exports without risk for efficient management of agricultural commodity stocks and market prices.” Is.” Government officials feel that there is nothing to panic as the measures taken in the recent past were enough to deal with the situation.

“I don’t see any immediate major threat to domestic inflation in rice. Some of the increase in prices is actually due to an increase in MSP and other input costs like fertilizers and fuel. Some increase will happen when prices of all commodities are rising. be.” NITI Aayog member Ramesh Chand told PTI-Bhasha.

He said that even if the production of kharif rice falls by 10-12 million tonnes (MT), there will be no threat to domestic availability.

Stating that the government intends to control inflation by restricting exports, Chand said that if it is successful, the inflation in rice will not be at risk of exceeding 5-6% which is “normal”.

The latest CPI data showed that rice inflation stood at 6.94% in August, compared to minus 1.2% in the same month last year.

PK Joshi, agro-economist and secretary of the National Academy of Agricultural Sciences, said that India is doing very well in comparison to the global price rise.

He said the rise in rice prices is not a major concern, but exports have been restricted to meet the demand of PDS.

Under the National Food Security Act, the Center provides 5 kg of food grains per person per month at the rate of Rs 2-3 per kg to 80 crore people.

Under the Pradhan Mantri Garib Kalyan Anna Yojana (PMGKAY) from April 2020, another 5 kg of food grains are given free of cost to 80 crore people. The PMGKAY ends in September and experts believe that any further extension will be a “political decision”.

Rice production and procurement have been bumper in the last few years, leading to large buffer stocks and increase in exports.

The buffer stock of rice stood at 47 MT including rice equivalent to unpolished paddy as on July 1, as against the buffer norm of 13.5 MT.

India, which commands a 40% share in the global rice trade, exported 21.23 MT of rice in 2021-22 against 17.78 MT in the previous year. Exports in the financial year 2019-20 were 9.51 MT.

This year the situation of paddy has changed due to deficient monsoon in some states.

The area under paddy has declined by 4.52% to 399.03 lakh hectares (LH) as on September 16 of the current Kharif season, from 417.93 lakh hectares in the year-ago period. Sowing hours are short by 9.37 lakh in Jharkhand, 6.32 lakh in Madhya Pradesh, 3.65 lakh in West Bengal, 2.48 lakh in Uttar Pradesh and 1.97 lakh in Bihar.

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