Rice procurement could fall well below 34 mt target

Written by Sandip Das | New Delhi | Updated: Mar 7 2014, 08:56am hrs
The rice purchase drive by government-owned Food Corporation of India (FCI) and state government-owned procurement agencies is all set to fall below the target of 34 million tonne (mt) for the 2013-14 marketing season (October-September).

According to data available with the food ministry till Thursday, government agencies have purchased only 24.8 mt of rice from farmers this year against 27.2 mt lifted in the same period last year.

Analysts say the decline in procurement also signals a likely downward revision of the production estimate. The agriculture ministry's second advance estimate on rice production for this season released last month pegged the production at 106 mt. The third advance estimate, usually released in May, could give a clearer picture of the production.

Food ministry officials told FE that kharif rice procurement is largely over and the agencies are likely to lift another 3-4 mt of rice harvested in the forthcoming rabi or winter season. Rabi rice production constitutes only about 10-12% of the total output as the chunk of rice is grown in the kharif season.

This decline of close to 10% in volume of procurement has been attributed to the adverse impact of cyclone Phailin on rice output in the key producing states of Andhra Pradesh and Orissa. Besides, inadequate monsoon rains witnessed in parts of Uttar Pradesh, Tamil Nadu and West Bengal have also impacted the standing crop, leading to lower arrivals in mandis.

The agencies have purchased more than 3.1 mt of rice from farmers in Andhra Pradesh till now, against 3.6 mt purchased during the same period last year. Similarly, in Orissa the government has purchased more than 1.7 mt of rice against

2.4 mt reported in the previous year. Both states contributed 6.4 mt (Andhra Pradesh) and 2.4 mt (Orissa) of rice to the central pool in the 2012-13 season.

With the exception of Chhattisgarh where the state government has purchased more than 5.3 mt till now against 4.7 mt reported during the same period last year in all other key growing states, Punjab, Haryana, Andhra Pradesh and Orissa, the volume of rice procurement from farmers has been less than the target.In Punjab and Haryana, where rice purchase operations are already over, both states agencies have purchased 8.1 mt and 2.4 mt, respectively, from farmers in this marketing season against 8.5 mt and 2.5 mt respectively reported in the previous year.

Because of the untimely storm witnessed in many districts of Punjab in September last year which destroyed the crop, rice procurement has been marginally lower in the state.The government's rice stock with the FCI and other agencies was reported at 16.9 mt (from the previous year's crop) at the start of this month, which is more than double of the strategic reserve and buffer stock norms.

The government had approved a minimum support price for 2013-14 (October-September) at R1,310 per quintal for common paddy rice, which is an increase of about 5% from around R1,250 per quintal in the previous year.

The government-owned agencies procure foodgrain from farmers for distribution to the targeted public distribution system (TPDS) and for maintaining buffer stock and strategic reserve norms. The corporation also keeps foodgrain for distribution to the armed forces.