Supplyco, Kerala government-run grocery outfit, is readying to source about Rs 160-crore worth rice buffer stocks from West Bengal and Andhra Pradesh.
With the price of Andhra-grown Jaya rice variety hotting up to Rs 23 per kilo in retail, the state government is forced to make urgent interventionary moves.
Kerala Cabinet meeting on Wednesday is likely to make a decision on whether the purchase will be cushioned by the state government.
At least one lakh million tonne bufferstock of rice will be necessary to keep the rice market in control, senior officials of Supplyco told FE. Through its 2,500 outlets, Supplyco had promised to make rice available at Rs 14 per kilo.
Rice merchants in West Bengal have expressed willingness to sell stocks at Rs 13.80 per kilo. However, factoring in the transportation costs from West Bengal, Supplyco will have to cough up at least Rs 160 crore. So it will not be economically viable, if the state government does not offer a subsidy.
Following the Andhra government imposing levy requirement on millers in Godavari district, Jaya rice had emerged dearer. The offer price from Andhra Pradesh is as high as Rs 17 per kilo. Including the rail wagon expenses, this could cost Supplyco Rs 20 per kilo. So in the first phase, Kerala is planning to buy 10,000 tonne from West Bengal by mid-June.