"It has not had an impact in the market yet but it is bound to have an impact."

Tanna said the government had released about 90,000 tonnes of grains to meet immediate demand from the cyclone victims.

India's Agriculture Ministry said on Wednesday that initial estimates suggested about two million tonnes of winter rice crop may have been destroyed in the killer cyclone that ripped through Orissa over the weekend.Agriculture Secretary Bhaskar Barua said about 150,000 hectares (370,000 acres) of rice crop could have been hit.

Orissa annually produces about six million tonnes of rice over 4.25 million hectares of sown area. India annually harvests around 82 milliontonnes of rice.

Crop damage to fuel price rise
Anil Adlakha, executive director of the All India Rice Exporters Association, said the damage to the crop would drive India's domestic rice prices higher. The country had enough rice stocks and would not need imports, he said.

India had grains stocks of 29.90 million tonnes on September 1 compared with 25.85 million tonnes a year earlier. Orissa grows mainly non-Basmati rice and most of the harvest is completed by October. Rice stored in godowns and in farmers' hands would have been damaged by the cyclone, Adlakha said.

Traders eyeing imports
Analysts said India may still have to import because of high domestic prices.

They said that with Indian rice outpriced in the worldmarket, traders were looking at cheaper imports. Indian rice is expensive because of high input costs, minimum price support by the government, local taxes and low productivity levels.

The Indian government permitted early last year duty-free import of coarse ricevarieties and rice with at least 50 percent broken content.

"Traders are looking at import options. It has started as a trickle, about 400 tonnes of rice came last month and they are testing the waters," said a Mumbai-based commodity analyst.

"The broken rice can be sold in mixed form with domestic rice or can find its way to eateries in the form of flour," he said.