After pulses, India needs to worry about rice prices

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Prices of rice might shoot up to reach a boiling point in the coming months, as the stock of the key staple is depleting fast due to a drop in production and deficient rains, a study by industry body ASSOCHAM has said.

It said there was an urgent need to closely monitor food prices as a rise in prices of rice could creat fresh challenges for consumers alrady hurting after increases in the prices of pulses, onion and some edible oil.

Even Though the government estimates kharif rice production at 90.61 MMT, deficit rains in states such as Punjab, Haryana, Uttar Pradesh, Bihar, Maharashtra and Karnataka meant that the best production that could be achieved was 89 MMT, the report said.

According to the study, rice stocks have been steadily declining for the past three years. As against a stock in 24.59 MMT in 2012, only 13.89 MMT (plus unlimited paddy 3.61 MMT) are in stocks currently.

“Increasing export outgo on account of PDS (Public Distribution System) and other welfare schemes will continue to weigh on availability in the open market.   Unless government is able to handle the situation prudently, depleting stocks will soon reflect on the open market prices”, the study added.

The actual production may be around 103 MMT during 2015-16.  On the stock front, rice stocks have been steadily declining in the past three years, adds the study.

Given the huge domestic demand for rice, government needs to closely monitor both prices and stock situation. Already a section of global exporting community is evaluating possibility of India entering international market for import of these commodities from 2017, if urgent steps are not taken to augment supplies.

The consequences of deficient 2015 monsoon are likely to be far-reaching. Besides slowing down the economy considerably and accentuating inflationary pressure coupled with shortages of essential food items across the country, it could also lead to dependence on import of essential food items..  Already India is heavily short on vegoils and pulses and a recurring monsoon failure might push the country into a tight corner in respect of rice, sugar, etc.

ASSOCHAM suggested that DSR (Direct Seeded Rice) should be encouraged to conserve water.  Presently, less than 10% of paddy production is under DSR due to limitations in the availability of suitable equipment for DSR in clay soils.  Urgent attention is needed in this regard to expand DSR acreage on war footing.

Given the drop in kharif 2015 foodgrain production and mere 252.68 MMT for 2014-15 against record 265 MMT for 2013-14 foodgrain production, it is highly doubtful if India could reach 250 MMT for 2015-16, which is ominous, the report said, it said.

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