Rice prices may reach a boiling point; time to be watchful early enough: ASSOCHAM Study

Highlighting the urgent need for a close monitoring of food prices, an ASSOCHAM study has cautioned that prices of rice may shoot up reach a boiling point in the coming months as the stock of the key staple cereal is depleting fast owing to deficient rains and fall in output.

After pulses, onion and some edible oil like mustard oil, rice may cause pain-in-stomach of the consumers if timely adequate safeguards are not taken, says the ASSOCHAM latest study.

Though the government estimates Kharif rice production at 90.61 MMT , this is unlikely to be achieved due to severe deficit rains in Punjab, Haryana, Uttar Pradesh, Bihar, Maharashtra and Karnataka and the best that could be achieved is 89 MMT.

 

According to the study, rice stocks have been steadily declining for the past three years as against the stock in 24.59 MMT in 2012, only 13.89 MMT (plus unlimited paddy 3.61 MMT) are in stocks as on today.

Rice stocks declining in past three years:

2012 24.59 MMT

2013 20.57 MMT (Plus unmilled paddy 9.28 MMT)

2014 17.33 MMT (Plus unmilled paddy 6.65 MMT)

2015 13.89 MMT (Plus unmilled paddy 3.61 MMT)

While releasing the ASSOCHAM paper on Impact of weak/deficient monsoon on agricultural production and prices, ASSOCHAM Secretary General Mr. D S Rawat said, the monthly rice requirement is estimated between 8.5 to 9 MMT whereas yearly requirement is close to 108 MMT.

Increasing export outgo on account of PDS (Public Distribution System) and other welfare schemes will continue to weigh on availability in the open market. Unless government is able to handle the situation prudently, depleting stocks will soon reflect on the open market prices, adds the study.

The actual production may be around 103 MMT during 2015-16. On the stock front, rice stocks have been steadily declining in the past three years, adds the study.

Given the huge domestic demand for rice, government needs to closely monitor both prices and stock situation. Already a section of global exporting community is evaluating possibility of India entering international market for import of these commodities from 2017, if urgent steps are not taken to augment supplies.

The consequences of deficient 2015 monsoon are likely to be far-reaching. Besides slowing down the economy considerably and accentuating inflationary pressure coupled with shortages of essential food items across the country, it could also lead to dependence on import of essential food items.. Already India is heavily short on vegoils and pulses and a recurring monsoon failure might push the country into a tight corner in respect of rice, sugar, etc.

ASSOCHAM suggest that DSR (Direct Seeded Rice) should be encouraged to conserve water. Presently, less than 10% of paddy production is under DSR due to limitations in the availability of suitable equipment for DSR in clay soils. Urgent attention is needed in this regard to expand DSR acreage on war footing.

Given the drop in kharif 2015 foodgrain production and mere 252.68 MMT for 2014-15 against record 265 MMT for 2013-14 foodgrain production, it is highly doubtful if India could reach 250 MMT for 2015-16, which is ominous.

Summing up kharif crop production scenario, it is pertinent to note that at a time when foodgrains production needs to be closer to 300 MMT, the country may just scrape through 250 MMT production. This situation needs close monitoring and imaginative handling in order to check prices and ensure timely availability

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