By November 1, India’s rice stock is projected to reach a record high of 30 million tons, marking the highest level in two decades. Managing such a substantial stockpile presents significant logistical challenges. To reduce this surplus, the government has implemented various measures in recent months. These include allowing states to directly procure rice from the Food Corporation of India (FCI), permitting the export of non-basmati white rice, and lifting the export duty on parboiled rice.
In a significant development, the Indian government’s decision to remove the duty on rice exports has resulted in a 10% reduction in global rice prices. This price decrease has been further compounded by the arrival of new crops from Pakistan and Myanmar.
Meanwhile, the Indian Food Ministry has confirmed that paddy procurement is actively underway in Punjab and Haryana. Government agencies in these states are projected to procure approximately 18.5 million tons and 6 million tons of paddy, respectively.
In these states, state government agencies procure paddy, which is then sent to sellers for milling into rice. Once milled, the rice is transferred to FCI for storage. FCI utilizes its own and rented warehouses to store the rice. The final step involves transporting the rice to consuming states, where it is stored in FCI godowns before being distributed to state governments for public distribution. However, limited storage capacity in Punjab and Haryana is currently hindering the smooth procurement process.
To accommodate the incoming new crop, it’s crucial to swiftly move the existing rice stock out of the FCI go downs in Punjab and Haryana.
According to a news report, Thailand’s 5% broken rice price declined from $529 to $507 per tonne in a fortnight between October 16 and October 30. Similarly, India’s offer for 5% broken rice decreased from $488-$492 to $444-$448, while Pakistan’s offer fell from $481-$485 to $463-$467. In the 25% broken white rice category, India’s price dropped from $491-$495 to $434-$438 per tonne, and Pakistan’s offer declined from $440-$444 to $424-$428 per tonne. For parboiled rice, Thailand’s 100% sortexed rice price decreased from $561 to $522 per tonne. Pakistan’s offer for parboiled rice fell from $500-$504 to $493-$497 per tonne, and India’s offer decreased from $490-$494 to $439-$443 per tonne.
The central government has taken two significant steps to manage rice stocks. Firstly, states have been granted permission to directly procure rice from the Food Corporation of India (FCI) to meet their specific scheme requirements. Secondly, 2.3 million tons of grain have been allocated for sale to ethanol distilleries.
As of now, FCI holds a rice stock of 29.9 million tons, with an additional 1.3 million tons expected from millers. To ensure the smooth operation of various government food security schemes, FCI is mandated to maintain a minimum rice stock of 10.25 million tons as of October 1st.
Several factors have contributed to the rise in rice stocks. Firstly, government agencies procured a larger quantity of paddy. Secondly, the government implemented measures such as halting the sale of rice from the central pool to states, banning non-basmati white rice exports, and imposing a duty on white and parboiled rice exports. These steps were taken to control food inflation and mitigate the impact of deficient rainfall.
India’s agricultural and processed food exports experienced a slight decline of 1% in the first half of FY25, reaching $12.13 billion. A significant contributor to this decrease was the 17% fall in non-basmati rice exports. Conversely, basmati rice exports saw a positive trend, increasing by 11% to $2.87 billion. The removal of the minimum export price (MEP) of $950 per tonne for basmati rice, which had been in effect since 2023, played a crucial role in boosting both volume and value. With the lifting of export restrictions on rice, the second half of FY25 is expected to witness a rebound in exports.
India is the world’s second-largest rice producer, cultivating 137.83 million tons annually, accounting for 26% of global production. China leads the world in rice production with 144.62 million tons (38%), followed by Bangladesh at 37 million tons (7%). Despite not being the top producer, India is the world’s largest rice exporter, shipping 20 million tons of rice annually. (IPA Service)