Fall in India’s Kharif paddy output may keep rice prices at higher levels 

A 6-7 million tonnes shortfall in rice production due to a fall in paddy sowing area is likely to keep rice prices at elevated levels, adding to the inflationary pressure that the slowing economy is already grappling with. Elevated food prices, including that of cereals, had led to retail inflation reversing a three-month declining trend, to touch 7 per cent in August.

Similarly, the wholesale price inflation, which declined to 11-month low, also showed price pressures from cereals resulting from wheat output being impacted by severe heat waves in some parts of the country. In addition to this, expectation of a lower paddy output – conservative by government estimates and higher if outside experts are to be believed – will keep inflationary expectations higher, experts and analysts believe.

Erratic June-September rainfall and delayed withdrawal of South-West monsoon rains have added to concerns over paddy crop.

India’s rice production during the 2021-22 crop year, ended June, stood at record 130.29 million tonnes (MT) as against 124.37 MT in the previous year. Food ministry has projected a fall of 6-7 MT in rice production during this year’s Kharif season, which accounts for 85 per cent of the country’s total rice output.

However, some believe there is no cause of panic yet and that the buffer stock India maintains is enough to meet demand for the public distribution system (PDS). Also, the government intervention in the form of banning export of broken rice and slapping a 20 per cent duty on export of non-basmati and non-par boiled rice will help contain the situation.

These restrictions were imposed due to price rise in rice and animal feed in the last one year. As per the data maintained by the Consumer Affairs ministry, the wholesale prices have risen by 10.7 per cent to Rs 3,357.2 per quintal as on September 14, from Rs 3,047.32 per quintal a year ago. The retail prices rose 9.47 per cent to Rs 38.15 per kg from Rs 34.85 per kg.

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