India lifts support price for rice

NEW DELHI: India hiked the base price it will pay farmers for rice this year well above current domestic levels, raising the prospects for a bumper harvest and exports from the world’s second-biggest producer.
At the same time, it increased the floor price for soybeans to help the world’s top importer of edible oils trim expensive overseas purchases, even while higher global prices are already a spur for more planting.
India raised its minimum support price (MSP) for common rice to 1,250 rupees per 100 kg for the year to end-June 2013 from 1,080 rupees the previous year. Superior-grade rice will be priced at a minimum of 1,280 rupees per 100 kg from 1,110 rupees in 2011/12, Home Minister P. Chidambaram said.
Paddy, the name for the crop before it is milled, was quoted at 1,100 rupees per 100 kg at Khanna, India’s largest grains market, in the northern Punjab state.
India in recent years has produced bumper harvests of rice, a staple food for many Indians and handed out at subsidized rates to the country’s half a billion poor. In 2011 bulging stocks prompted the government to allow exports of the staple.
The country could emerge as the world’s second-largest rice exporter this year after Thailand.
India is a major producer and consumer of grains, and the coalition government is keen to woo farmers in a country where about 15 percent of the near $2 trillion economy is generated by the agriculture sector.
The government also plans to boost the amount of cheap food it hands out under a new food security bill and needs to ensure it has enough supplies of staples including rice and wheat.
But the hefty food subsidies — likely to be about $13.5 billion in 2012/13 — weigh on state finances at a time when inflation is rising and economic growth is slowing.
For soybeans, used to make soyoil which India imports heavily, the government raised the MSP by 33 percent to 2,200 rupees per 100 kg. That is still well below spot prices of over 4,000 rupees, which already encourage more planting.
Soybean acreage is expected to rise 7 percent in 2012/13 from the 10.3 million hectares planted last year.
The government also raised the support price for corn by 20 percent to 1,175 rupees per 100 kg, just above current spot prices of about 1,150 rupees per 100 kg.
It also raised the cotton purchase price for the long staple variant by 18 percent to 3,900 rupees per 100 kg.
Also yesterday, the weather office said India’s crucial monsoon rains were 50 percent below average in the past week, a second week of scant rain and confirmation the four-month season has got off to a slow start.

But experts said there was no urgent cause for concern, with crops not greatly affected by the quantity of rains at this early stage. More important for growth is rainfall distribution from mid-July after the monsoon hits the entire country.
“There is no reason to press any panic button at this stage as the rainfall activities are expected to improve,” said A. K. Singh, deputy director-general of the state-run Indian Council of Agricultural Research.
India’s weather office has forecast average rainfall for the whole June to September season — the third year in a row — to avoid a drought in one of the world’s biggest consumers of rice, wheat and sugar, with a population of about 1.2 billion.
The monsoon rains are vital for farm output and economic growth as about 55 percent of the south Asian nation’s arable land is rain-fed, and the farm sector accounts for about 15 percent of a nearly $2-trillion economy, Asia’s third-biggest.
Weather officials said the rains were expected to improve in next week.
“We expect increased rainfall activities over western parts and interior south India during the next three to four days,” said M. Mahapatra, a senior scientist at the India Meteorological Department.
“There is a cyclonic pressure over the Arabian Sea which is expected to bring rains on the west coast and interior Karnataka and Maharashtra,” Mahapatra said.
The meteorological department is expected to release its outlook for the rest of the monsoon during the third week of June. Weekly bulletins on rainfall continue during the season.