Depleting food grain stock ring alarms: Is India staring at a rice crisis?

Over 44 million tonnes of grains in stock compared to 78.6 million tonnes last year; Wheat dangerously close to buffer limit

By Raju Sajwan
Published: Thursday 06 October 2022

India may face a rice shortage following a similar wheat crisis earlier this year. Depleting stocks of wheat and paddy has raised concerns about the Kharif paddy procurement despite constant reassurances by the government.

The central stockpile has 44.1 million tonnes of food grains September 30, 2022 — 20.9 million tonnes of rice and 23.2 million tonnes of wheat, according to the Union Ministry of Consumer Affairs, Food and Public Distribution. 

The stock was 49.28 million tonnes before September 1, 2022, with 27.95 million tonnes of rice and 24.82 million tonnes of wheat. 

The depleting food grain stock has raised concerns, despite continuous reassurances by the central government of enough stock available to meet India’s food grain demands. 

The numbers show grain stock is depleting at a worrying rate. There were 55.16 million tonnes of food grains in store January 2022. The Centre had 78.61 million tonnes of grains on September 1, 2021 in comparison, with 26.83 million tonnes rice and 51.78 million tonnes of wheat.

Read more: Staple spikes: Has an abnormal Kharif 2022 caused rice prices to rise

The procurement target was incomplete for the Rabi season 2021-22, which affected the wheat stock. There is similar confusion over paddy production during the Kharif season, which indicates a shortage of rice. 

The production of rice may decline by 6.05 per cent compared to last year, according to the first estimate of food grain production released by the directorate of economics and statistics under the Union agriculture ministry. 

A deficit of 6.77 million tonnes of rice is expected in 2022-23, according to the estimates. 

However, the estimates were calculated before heavy rains in the last week of September. There was a lot of damage to finished paddy crop due to heavy rains in north India September 22-23. 

Rain particularly affected crops in Punjab-Haryana, which is a major contributor to the government stock. 

Challenges in procurement

The government began procuring paddy in Punjab-Haryana October 1, 2022. However, farmers are still waiting for paddy to dry from the rainwater. 

Read more: First Advance Estimate 2022-23: Rice output to fall 6%, total foodgrain output 4%

“Farmers are not sure of reactions by mandi (market) workers when we bring soaked grains,” said Jogendra, a farmer of Ballabhgarh, Haryana. Government agencies do not buy paddy if there is more moisture than the prescribed amount in the grains.

Paddy procurement can become a big challenge for central and state governments in such a situation, just like wheat. The wheat procurement target for Rabi season 2022-23 was 44.4 million tonnes, but the government could only buy 18.79 million tonnes. 

There were two reasons behind the wheat shortage: A decrease in wheat production due to severe unseasonal heat in March-April and the global food crisis due to the Ukraine-Russia war. 

Wheat prices had shot up globally following the war and private traders directly bought wheat from farmers to take advantage of the hike. The government later banned its export. 

The pattern is repeated with paddy. Rice prices have been driven up as the war and the global food crisis continue. 

The retail price of rice has increased by 8.39 per cent as compared to last year, showed data from the central government. Wholesale prices have gone up by 8.85 per cent. Bringing down rice prices during the festive season is the real challenge for the Centre. 

Private traders have started contacting farmers to buy rice directly as demand for it is increasing. A rice trader from Hodal, located on the Uttar Pradesh-Haryana border, on condition of anonymity, said he has started procuring paddy at a price higher than the minimum support price (MSP).

The MSP for normal paddy is Rs 2,040 per quintal this year and grade A paddy is Rs 2,060 per quintal. Procurement of rice by private traders is driving up shortage concerns even more. 

Buffer stock regulations require 10.25 million tonnes of rice and 20.58 million tonnes of wheat in store. Wheat stock is now dangerously close to the buffer limit. 

Read more: India bans broken rice export; 20% duty on other grades

As its procurement has stopped, there is no possibility of increasing wheat stock. However, the government is also supposed to distribute wheat under the National Food Security Act. 

The scheme to provide free ration to about 798.5 million families under the Pradhan Mantri Garib Kalyan Yojana has been extended till December 2022. The government has to distribute 11.96 million tonnes of food grains (2.1 million tonnes of wheat and 9.86 million tonnes of rice) from October 2022 through December 2022. 

This means that the quantity of wheat in the stock will come down to 18.47 million tonnes as on January 1, 2022, while as per the buffer rules, 13.8 million tonnes of wheat is required in store.

The Centre has increased the quantity of rice distributed in the public distribution system to maintain the wheat buffer numbers. 

Food Corporation of India’s stock will comfortably exceed the buffer norms even after meeting the stock requirement under NFSA and other welfare schemes, claimed the food ministry. 

Around 11.3 million tonnes of wheat and 23.6 million tonnes of rice will be in stock by April 1, 2023, against buffer norms of 7.5 million tonnes of wheat and 13.6 million tonnes rice after meeting all the requirements, the Centre estimated. 

Around 51.8 million tonnes of rice will be procured in the Kharif market, according to the food ministry. Last year, 50.9 million tonnes of rice was procured. 

Given the slowdown in production and active purchase of rice by private traders, whether the procurement target will be met remains to be seen. 

Read more: Kharif sowing period almost over, but huge deficit for paddy and pulses

The government also seems concerned about procurement. Secretary for the Union food ministry Sundhashu Pandey has been on a tour of Tamil Nadu for the past four days. TN is the only state where rice production has been good this year. Around 0.2 million tonnes of rice has been procured from the state till now. 

India consumed 109.5 million tonnes of rice in the year 2021-2022, according to a report by federal agency United States Department of Agriculture in June 2022. This means there may be a shortage of around 4.5 million tonnes of rice this year. 

This is likely the reason the export of broken rice was banned. India tops the world in terms of rice exports and in 2021-22, India exported 212.3 million tonnes of rice.

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