FCI’s rice bowl sees sharp dip; rates to rocket

NEW DELHI: The paddy/rice procurement by the Food Corporation of India (FCI) has seen a sharp 14% drop at the beginning of the new purchase season beginning October 1. This hint of lower procurement, confirming the fears of a poor kharif crop, could cause prices to rally, and undermine the government’s efforts to check food inflation through better supplied public distribution system. The FCI was only able to procure 39.7 lakh tonnes of paddy/rice between October 1 and 19 this year compared to 46.4 lakh tonnes last year. The government procured a whopping 333 lakh tonnes of rice in all in the 2008-09 marketing year which ended 30 September. The rice shortfall alone is expected to be anywhere at 6-8 million tonnes. The Prime Minister’s Economic Advisory Council (PMEAC) on Wednesday indicated “large acreage losses under kharif foodgrain”, and pegged the shortfall foodgrain (rice, coarse cereals) at 11 million tonnes. The committee also said there was a 33% increase in primary food index in the first half of 2009-10, referring to food inflation. Wholesale prices of India’s key staple rice have already shot up 14.5-15% over the twelve months to one year to September 2009, according to trade monitors on the back of apprehensions over a sharp decline in output this year. The crop output estimates for rice, annually released in mid-September, was put off up to October 15 but is yet to come, keeping grain prices firm in the market. “The biggest hit taken is by average quality rice in Punjab and Haryana on account of poor rains. Better quality rice in Andhra Pradesh also took a hit on account of the floods late in the monsoon season. The developments have affected market sentiment adversely and impacted rice prices,” a Delhi-based rice trader said। To keep foodgrain prices tethered, the government is planning to release significant quantity of wheat in the open market this week, and that has also spiked wheat prices on the back of expectations of high official wheat sale prices. In the capital’s grain markets, wheat prices have shot up by Rs 150/qtl to Rs 1300 in the recent past, directly impacting on retail prices by an average Rs 2/-per kg. Trade sources hold that wheat prices in the wholesale could go up further, impacting retail prices further. (ई टी )