Rice imports to build price buffer

Written by fe Bureaus | New Delhi | Updated: Oct 31 2009, 06:47am hrs
After two decades, the country will again become a rice importer, this time to replenish its buffer stock.

On Friday, the government-owned MMTC floated a tender to import 10,000 tonnes of rice by December. The other two trading agencies, State Trading Corporation and PEC, are also expected to float tenders of a similar size in a day or two. The tenders follow the official estimates of a drop in rice output by more than 10 million tonnes in 2009-10.

The imports, the first in 21 years, are part of the governments move to prevent a price flare-up in the staple by building up adequate buffer stocks.

Last week, finance minister Pranab Mukherjee had said rice production could drop by around 16 million tonnes this year as the drought in almost half of the country and later floods in Andhra Pradesh and Karnataka ravaged farmlands.

Earlier this month, government had lifted the customs duty of around 70% on rice to facilitate imports, leading to private traders tying up rice imports of almost 400,000 tonnes.

Official estimates show paddy has been planted in around 328.98 lakh hectares, down 60.5 lakh hectares compared to last year. The crop was not sown in large tracts of land in Bihar, Uttar Pradesh, Chhattisgarh and Jharkhand as deficient southwest monsoon forced growers to shift to other crops.

Because of low planting, paddy procurement this year had a slow start, with no sizeable contribution coming from UP, Bihar, Andhra Pradesh and Tamil Nadu.

Though, there has been some improvement in procurement of latealmost 76.99 lakh tonnes of paddy has been procured by state agencies till nowofficials acknowledge that rice procurement this year would be lower than last years. In 2008-09, the procurement was around 33 million tonnes, as rice production reached a record 99 million tonnes.

Officials said though state agencies have started importing rice, but there is no shortage as the government is sitting on huge stockpile of foodgrains.

On October 1, rice reserves were at 14.5 million tonnes against a buffer norm of 5.2 million tonnes.

There is absolutely no need to panic, as we have adequate food reserves and will comfortably meet all challenges, a senior government official said.

Meanwhile, rice prices in the retail markets have started firming up because of the projected fall in output. Consumer affairs ministry data shows rice prices in Delhi have moved up by almost Rs 2 per kg after July, while in Chennai retail prices have firmed up by around Rs 3 a kg to Rs 22. In Mumbai and Kolkata also rice prices have moved up marginally in the last few months.