Thanks to the expansion of the area under paddy due to good monsoon, India’s rice output is expected to surge to a record high especially after the government raised the price of purchasing the new-season crop.
Higher output by the South Asian nation might dampen domestic prices and make exports more competitive. It could also force India’s state-run agencies to ramp up purchases from farmers even as inventories are bulging.
“Farmers are interested in rice. They are likely to expand area due to government support. In the new marketing year, we could produce as much as 120 million tonnes,” said B.V. Krishna Rao, President of India’s Rice Exporters Association.
It is worth noting that the Indian government raised the price by 2.9% at which it would buy new-season rice from growers.
The country has begun planting the summer-sown crop as the monsoon has spread to main rice-growing areas.
The good monsoon and rising exports due to a rally in global prices have been motivating Indian growers to plant more rice. Unlike its competitors, India has a massive surplus for export and it will get bigger in the new season, said Nitin Gupta, Vice-President for Olam India’s rice business.
As per the Food Corporation of India’s statistics, state-run agencies were holding over 27 million tonnes of rice and another 21 million tonnes of un-milled paddy.