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India Rice Procurement


India West Bengal State Lacks Funds to Procure Paddy Rice; Bihar State Announces Bonus on MSP of Paddy Rice


  Jan 24, 2014

India’s eastern state of West Bengal is planning to use private rice millers to procure paddy rice from farmers due to lack of funds with the government to procure paddy rice directly.

Rice production in West BengaI was estimated to fall to around 13 million tons this year due to adverse weather conditions, but the state produced around 15.3 million tons. Meanwhile, government officials say that paddy rice procurement by government agencies stands at around 88,058 tons, which is just about 7% of the targeted 1.3 million tons. The government has also discontinued the Rs. 70 per quintal (about $11 per ton) bonus on paddy support price in 2012 due to lack of funds.

Higher production and lower procurement have led to decline in paddy rice prices. Local sources say that farmers are forced to sell their paddy rice at around Rs. 1,280 per quintal (about $ 207 per ton) to private traders, which is down about 3% from the minimum government support price (MSP) of Rs. 1,310 per quintal (about $212 per ton). The West Bengal government says that early procurement of levy rice by millers will strengthen paddy prices and encourage farmers to re-invest in the boro season rice crop which begins in January-end.

However, local sources say that the move by the government is to appease farmers ahead of general elections in April – May 2014. Moreover, there are concerns that rice prices may increase in the state if farmers sell their paddy rice in the neighboring state of Bihar, where the state government has announced a bonus of Rs. 250 per quintal (about $40 per ton).

The West Bengal government usually procures levy rice from millers after March, but wants to complete levy rice procurement before March this year. Under the levy rice policy, millers procure rice from farmers at MSP and government buys the rice from millers later for its welfare programs.

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India Government Rice Procurement Reaches 26 Million Tons; Domestic Rice-Based Inflation Touches 17%

Indian government agencies have procured almost 26 million tons of rice from the ongoing Kharif Marketing Season (KMS 2012 to 2013). According to the Ministry of Consumer Affairs, Food and Public Distribution, total rice procured until January 14, 2013 is about 6% more than the rice procured during the same period of the previous season.

So far, the Indian state of Punjab accounts for about 8.5 million tons, Chhattisgarh for about 3 million tons, Haryana for about 2.5 million tons, Andhra Pradesh for about 2 million tons, and Odisha for about 1.1 million tons of rice. The Indian government is targeting total procurement of 40 million tons of rice in 2012-13 (October to September), up about 14% from 35 million tons of rice procured in 2011-12.

Meanwhile, India’s Wholesale Price Index (WPI)-based inflation for rice stood at about 17.1% in December 2012, much higher than about 1.17% recorded in December 2011, according to the Ministry of Commerce.

The index for rice rose about 15.56 points since March 2012, a reflection of the 16% hike in minimum support prices announced by the government for the 2012-13 Kharif (main) rice crop. The WPI-based inflation for rice may rise further in the coming months as production from India’s main rice crop is expected to decline about 5% while rice planting area of the secondary rice crop (which accounts for around 15% of total annual rice production) is trailing about 26% from last year.

For the month of December, 2012, the WPI-based inflation for all ccommodities stood at about 7.18%, down from 7.74% in December 2011, the Ministry of Commerce said.

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India 2012-13 Rice Procurement Reaches 16 Million Tons

India’s Food Corporation of India (FCI) and other government agencies have procured about 16.06 million tons of rice in the marketing year 2012-13 (October to September) as of December 28, 2012.

So far, the northern state of Punjab leads with over 8.54 million tons of rice procurement, ahead of Haryana with 2.57 million tons, and Chhattisgarh with over 1.74 million tons. Procurement has also begun in the southern state of Andhra Pradesh which has contributed about 1.39 million tons so far. However, rice from eastern states, which account for over 50% of total rice produced in India, is yet to enter the central pool.

India is targeting total rice procurement of 40 million tons in the MY 2012-13, up about 14% from 35 million tons procured in 2011-12.

Rice procurement as of December 28, 2012 is almost 2% higher than around 15.75 million tons procured at this time last year, according to the Ministry of Consumer Affairs, Food and Public Distribution.

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