This year's monsoon in India has been good, covering up for earlier shortfalls with lots of rain in August. The goal of 136.30 million tonnes (mt) of rice output is anticipated if the current upward trend lasts through September. This output boom may help to reduce the inflation of rice. Carrying expenses will rise as a result of the government's central pool stocks rising, though. Looking to export rice in bulk?

Impact of Rainfall Deficiency

Although Haryana and Punjab had severe rainfall deficits earlier in the season, part of the deficit has been made up by recent rains in Haryana. Punjab, a significant supplier of rice to the central pool, continues to experience a 43% rainfall deficit. This won't have a significant impact on output right now, but it raises long-term questions about how subsurface water resources will replenish.

State Government Initiatives

Haryana has implemented a Rs 5,000 per hectare bonus for kharif and horticultural crops in order to assist farmers who are suffering higher input costs; this move is probably motivated by the impending state elections. While Chhattisgarh and Madhya Pradesh have promised a bonus of Rs 917 per quintal of paddy, Punjab has not yet announced equivalent support. By taking these steps, rice procurement could increase and possibly reach 60 mt during the Kharif Marketing Season 2024–25.

Overflowing Granaries and Market Challenges

The record regional pool rice stocks of 2023–24 are the outcome of the high purchase levels. The stock was 45.48 metric tons as of August 1, 2024, of which 32.75 metric tons had been received and 12.73 metric tons were still pending milling. This amount greatly surpasses the buffer norm for October 1 of 10.25 mt. Consumer rice inflation has been in double digits since October 2022 despite this excess, in part because private market supply is restricted by high procurement levels.

Options for Managing Excess Stocks

Export from Central Pool Stocks - WTO obligations make exporting via the central pool more difficult. India is required by the peace clause of the 2013 Bali Ministerial Conference to refrain from trade distortions, particularly those that impact global pricing and volumes. Regular WTO reporting is necessary for compliance.

Sale Under Open Market Sale Scheme (OMSS) - In contrast to wheat, rice has fewer bulk customers, which reduces the effectiveness of OMSS for rice.

Distribution as Bharat Rice - With the exception of Delhi, where sales take place through Mother Dairy booths, there is little distribution of subsidised rice through Nafed, NCCF, and Kendriya Bhandars.

Additional Allocation Under PDS - Extra food grains were supplied by the government during the Covid-19 pandemic. Though wheat stocks are low and further rice allocations may be difficult, a similar strategy could be taken into consideration.

Allocation for Ethanol Production - Although rice has historically been used to produce ethanol, this is not the best option because of rice's high water content.

Removing Export Restrictions - This appears to be the most workable option. Improving export regulations would release the strain on procurement and enable private merchants to participate more actively in international trade.

Conclusion

In conclusion, there are advantages and disadvantages to India's rice surplus. Large central reserves have the potential to cause cost increases and market distortions, even as increased output can help reduce inflation. The government should think about lowering export limits, looking into alternate distribution routes, and promoting the development of a variety of crops in order to overcome these problems. Effective management of rice inventories, market stabilisation, food security, and agricultural sustainability can all be supported by these actions.

If you want to import or export rice in bulk or agro commodities in bulk, Tradologie.com is the best B2B platform. It facialites the bulk transactions without any middlemen through its state-of-the-art SaaS platform. Visit www.tradologie.com to explore B2B export opportunities and stay updated with the latest trends in the industry. 

To register as a buyer, click here. To register as a seller, click here.