Domestic prices of rice may continue to increase: Food Ministry

A DAY after the Agriculture Ministry pegged kharif rice output at 104.99 million tonnes – lower than 111.76 mt in the last kharif season – the Food Ministry on Thursday said the domestic prices of rice are showing “increasing trend” and it may “continue to increase” due to the lower production forecast and the higher non-basmati export.

The Food Ministry’s statement came on a day when the all-India daily average retail and wholesale prices of rice, wheat, wheat flour recorded 9-20 per cent rise than the prices a year ago.

According to data available on the Department of Consumer Affairs portal, the all-India daily average retail prices of rice were higher by 9.03 per cent, wheat by 14.39 per cent and wheat flour by 17.87 per cent as compared to their prices a year ago. The all-India daily average wholesale prices of rice were higher by 10.16 per cent, wheat by 15.43 per cent and wheat flour by 20.65 per cent as compared to their prices a year ago (see chart).

The Agriculture Ministry on Wednesday had released the First Advance Estimates of production of major kharif crops for 2022-23 that pegged kharif rice production at 104.99 million tonnes during the current season in wake of uneven monsoon, which is 6.77 mt – or 6 per cent – lower than the 111.76 mt production in the last season. The kharif rice production estimates are lower than the target of 112 mt set for the current season and production of 105.21 mt for 2020-21. The dip in kharif rice production is significant in view of the requirement of rice for distribution under the National Food Security Act 2013.

On Thursday, discussing the domestic rice production scenario, the Food Ministry in a statement said, “The likely shortfall in area and production of paddy for the kharif season 2022 is 6%.”

“In domestic production, 60-70 LMT estimated production loss was earlier anticipated. Now, production loss of 40-50 LMT is expected and production output is not expected to be higher this year but only on par with previous year,” the statement said.

“The domestic prices of rice are showing increasing trend and it may continue to increase due to low production forecast by about 6 MMT [million metric tonnes] of paddy and 11% increase in export of non-basmati compared to the corresponding period of last year,” the ministry said.

The statement said the recent changes in India’s rice-export rules have helped keep a check on domestic prices without reducing the availability for exports.

“The changes have been done keeping in mind the need to support the ethanol-blending program that saves costly oil imports and to help the animal husbandry and poultry sectors by reducing the cost of animal feed that has a bearing on the price of milk, meat and eggs,” the statement said.

Explaining the need for amendment in rice export rules, the statement said, “There has been a rise in global demand for broken rice due to geo-political scenario which has impacted price movement of commodities including those related to animal feed.”

“Export of broken rice has increased by more than 43 times in past 4 years (21.31 LMT exported from April-August, 2022 compared to 0.51 LMT in the same period in 2019) with a significant jump in 2021-22 over last year. In the year 2021, the quantity exported was 15.8 LMT (April-August, 2021). Prices of broken rice rose significantly in the current year,” it said.

Highlighting the impact of rising export of broken rice, the statement said, “Domestic price of broken rice, which was Rs 16/kg in the open market, has increased to about Rs 22/kg in states. Poultry sector and animal husbandry farmers were impacted the most due to price hike of feed ingredients as about 60-65% inputs cost for poultry feed comes from broken rice. Any increase in prices of feedstock are reflected in the price of poultry products like milk, eggs, meat etc. adding to food inflation.”

“As per the notification of DGFT, the transitional relaxation for export of raw broken rice (HS Code 1006-4000) was up to 15th September, 2022 but now has been extended up to 30th September, 2022 and shall be further extended up to 15th October, 2022,” the statement said.

The government had banned the export of broken rice on September 9.


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