The Indian government is expressing concern over the nearly 13% increase in rice prices and is urging traders to procure from the Food Corporation of India (FCI). However, the FCI has encountered challenges in selling rice at its weekly e-auctions, with only 10,000 tonnes sold out of the 1.93 million tonnes offered. The government conducted a meeting to understand the reasons behind the elevated rice prices and poor offtake.
Trade and industry sources suggest that government officials may not fully comprehend the dynamics of the rice trade. There is a notable shortage of specific rice varieties in demand, such as Sona Masuri or Ponni, contributing to the higher prices. Farmers are primarily cultivating varieties procured by FCI, leading to a scarcity of popular types.
FCI's procurement target is 14% lower than the previous year, adding further pressure to rice prices. Traders face hindrances such as FCI's tender terms, including lot sizes of 100 tonnes and demands for 100% advance payment. The government is urged to focus on consumer preferences, reassess production estimates, and address infrastructure costs to stabilize rice prices.
The analyst emphasizes the need for the Centre to obtain a clear picture of production by seeking data from states and Agricultural Produce Marketing Committees. There is a suggestion to gather data on variety-wise rice consumption to better understand the demand-supply gap. The overarching recommendation is for the government to take comprehensive measures to address the complexities of the rice market and ensure stability.
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India