Economy News

Govt may consider lifting curbs on rice exports

Sources told FE that the government will assess the sowing of kharif paddy—expected to commence next month—before taking a call on removing curbs on shipments.

Given the huge surplus of rice stocks and the forecast of an ‘above normal’ monsoon that will likely boost paddy sowing in the kharif season, the government may need to look at lifting the restrictions on rice exports imposed last year.

Sources told FE that the government will assess the sowing of kharif paddy—expected to commence next month—before taking a call on removing curbs on shipments. “We need to look at lifting restrictions on rice shipments as kharif crop prospects look bright,” an official said.

With the onset of monsoon over the Kerala coast next month, sowing of kharif paddy, which has a share of 80% in total rice output, is carried out in the June-July period with the progress of rains across the country.

Last month, the India Meteorological Department (IMD) forecast ‘above normal’ rainfall in June-September this year, with 90% chances of the rains being in the “normal-to-excess” range. Last year, precipitation was patchy and below normal, which had hit the rice output.

“Surplus stocks and prospects of bountiful monsoon rains augur well for lifting restrictions on rice exports,” an official said.  

While retail  prices of rice rose by 12.69% on year in March, the price rise is expected to soften in the next few months due to higher base effect. The inflation in rice prices has been in double digits since October 2022.

The rice stocks held by the Food Corporation of India (FCI) is currently close to four times the buffer for July 1 despite a 7% fall in procurement in the current season (October-September) compared with the same period last season. Currently, FCI holds 53.19 million tonne (MT) — 31.81 MT of rice stocks and 21.38 MT of grain receivable from millers. The stock is against the buffer of 13.54 MT for July 1.

In addition, officials said FCI so far has received purchase indent for 1.5 MT of rice from the agencies such as Nafed, NCCF and Kendriya Bhandar for selling ‘Bharat’ rice. About 0.71 MT of grain has been lifted by these agencies for distribution through retail outlets at `29/kg.

Last year, the government had initially banned white rice exports and subsequently imposed a 20% shipment duty on parboiled rice to improve domestic supplies as price rise remained in double digits. The government, from time to time, allowed rice exports to meet the food security needs of some countries on the basis of request.

The shipment of aromatic Basmati rice currently has a minimum export price of $950/tonne. 

In FY23, India exported a record 22 MT of rice to more than 100 countries and last fiscal because of restrictions on rice shipment, the volume of exports dropped to around 16 MT.

India has been the world’s largest exporter of rice since 2012 with more than 40% share in annual global trade of 52-54 MT. 

Paddy procurement by the government agencies has crossed 68.59 MT (45.95 MT in terms of rice) in the current season – 2023-24 (October-September) so far, which is 7% lower than the same period in the last fiscal.

In addition, the agencies are targeting to purchase around 10 MT of rice in the ongoing rabi marketing season in Odisha, Telangana, Tamil Nadu and Andhra Pradesh, which is expected to bolster grain stock further.

The government had purchased a total of 56.87 MT of rice in the 2022-23 season.

FCI requires around 40 MT of rice annually to distribute to 800 million beneficiaries under Pradhan Mantri Garib Kalyana Anna Yojana.

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