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India State Plans to Supply High Quality Rice at Subsidized Rates

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India’s southern state of Andhra Pradesh is planning to offer high quality rice at subsidized rates through fair price shops (FPS) to make rice affordable for consumers.

According to local sources, the government has already begun providing high quality rice in the capital city of Hyderabad at around Rs.30 per kilogram (about $488 per ton), down about 40% compared to the current market price of around Rs.50 per kilogram (about $813 per ton). Officials say that the state government is seeking rice from neighboring states to run the program which is likely to run until supply improves in around two months when harvest peaks in the state.

Rice prices have surged in the retail market in Andhra Pradesh in 2012-13 partly due to lower rice production. According to government sources, rice procurement from Andhra Pradesh for the central pool declined to around 6.45 million tons in 2012-13, down about 33% from around 9.6 million tons in the previous year. India's overall rice production in 2012-13 is estimated at aorund 104.5 million tons.

Meanwhile, the Finance Minister justified high rice prices. He said that rice prices are increasing due to higher purchase prices offered by the government and people should not expect rice farmers to remain poor forever.

Separately, another key rice producing state of India, Punjab, has started paying farmers the minimum suppport prices (MSP) for paddy directly through their bank acccounts. The move is expected to help farmers bypass middlemen or commission agents, says the government.

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