After daal, now get set to pay more for rice

The poor monsoon this year is expected to lead to a drop in rice production, leading to price rise, especially since the govt’s stock of the grain has been shrinking steadily, says an ASSOCHAM report

Daal-rice, so far considered the most basic meal, is now set to get even more costly for the common man, as the Associated Chambers of Commerce and Industry of India (Assocham) has predicted that rice prices will rise considerably in the coming months.

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The Assocham report has warned that unless swift action is taken, rice prices will rise considerably by 2016. However, traders and officials at APMC grains market (pictured above) have rubbished this claim
The Assocham report has warned that unless swift action is taken, rice prices will rise considerably by 2016. However, traders and officials at APMC grains market (pictured above) have rubbished this claim

The report warned that this was because of twin factors — not only is the poor rainfall expected to result in a shortfall in rice production this year, but the government’s stock of the staple grain has also been declining in the past few years.

This is further bad news for the common man, still reeling under sky-high daal prices. The government has estimated that the Kharif yield of rice will fall to 90.6 million metric tonnes (MMT), compared to 90.86 MMT in the corresponding period in 2014-15 and 91.5 MMT in the year before that.

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This is due to poor rainfall in the states of Punjab, Haryana, Uttar Pradesh, Bihar, Maharashtra and Karnataka – all rice growing regions. Kharif crops (sown in June and harvested in September-October), which provide about half of the year’s food grains supply, are largely dependant upon the monsoon, which contributes 90% of the rainfall in India.

Short fall
Based on these figures, an Assocham study has further estimated that the total production of rice is likely to go no higher than 103 MMT in 2015-16, falling short of the annual consumption of 108 MMT across the country.

While the production figure for this year is not vastly different from the past two years (see box), matters are made worse by the steady decline in rice stocks – used by the government to cover any shortfall in the market – over the past few years, from 24.59 MMT in 2012 to 13.89 MMT this year. Unless timely action is taken, rice prices will steadily move up by 2016, warned the report.

‘No price rise’
On the other hand, traders and officials at the wholesale APMC market at Vashi have rubbished these claims made by Assocham.

“Rice is cheap at present. We do not see any immediate impact on the prices of rice in coming months, as the market is stable. Even if it increases, the impact would be minimal,” said Kanji Gala, secretary of the Grain, Rice and Oilseeds Merchants’ Association (GROMA).

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Even officials from the APMC grain market maintain the same belief. Ravindra Patil, deputy secretary of the grain market, told mid-day, “Considering the present market situation, we do not see any price rise in rice.”

‘Bound to happen’
According to Manju Negi, public relations director at ASSOCHAM, a price rise is bound to happen. “Apart from poor rainfall this year, decreasing stock in the past years will also be responsible for the price rise. Though the markets are stable now, in coming months, the scenario will change. The hike in rice prices cannot be predicted as of now.

It depends upon the harvest. There can be a hike of 10-15% or even more than that,” said Negi, adding that the study had been conducted on the basis of details of climatic conditions from across the country, provided by the India Meteorological Department (IMD).

Report highlights
>> Rice production is estimated to be around 103 MMT in 2015-16

>> This is 5 MMT less than the annual consumption rate of 108 MMT

>> Report stated that the poor monsoon will likely result in a smaller Kharif yield this time 

>> From 265 MMT in 2013-14, total food grain production fell to 252.68 MMT the next year, whereas this year it is doubtful whether the figures will even reach 250 MMT

>> Demand for rice has risen considerably due to increasing exports 

>> There is also greater pressure on the market on account of welfare schemes such as the PDS (Public Distribution System)

Taking stock
The government’s stock of rice has been shrinking with every passing year, which means there will be limited relief to the market as well:
>> 2012: 24.59 
>> 2013: 20.57 
>> 2014: 17.33 
>> 2015: 13.89

(All figures in million metric tonnes)

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