Commerce and trade sources, chatting with businessline on the situation of anonymity, mentioned authorities officers have failed to understand the dynamics of the rice commerce.
Quick provide
“Officers must know there’s quite a lot of distinction in promoting wheat and rice. Additionally, the difficulty of rice costs ruling increased is as a result of there’s quick provide of the varieties which might be in demand,” mentioned an exporter based mostly in South India.
In response to the Ministry of Client Affairs, rice costs have elevated by almost 13 per cent, whereas, on the similar time, these of wheat flour (atta) have gone up by just one.5 per cent.
Final week, the Meals Ministry convened a gathering of rice exporters and merchants to search out out the explanations for rice costs ruling excessive and why the offtake from the FCI e-auctions held each week is poor. It plans to carry one other assembly on January 15, sources mentioned.
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The FCI has been capable of promote 3.53-lakh tonnes (lt) of the 4 lakh tonnes on supply, whereas it has been capable of offload solely 10,000 tonnes of rice of the 1.93 lt it has provided on the weekly e-auctions.
Every nation within the area consumes a selected number of rice, and there’s a scarcity that has been carried over since 2022 and is aggravating now. “We’re witnessing a situation much like the one we noticed in wheat in 2022,” mentioned a commerce analyst.
The issue with rice is that farmers, notably within the North and some different components of the nation, are rising varieties which might be procured by the FCI and consumed by African nations, mentioned the analyst.
“There’s a scarcity of key rice varieties reminiscent of Sona Masuri or Ponni, resulting in an increase within the cereal’s costs,” mentioned the exporter.
FCI’s phrases
An exporter from the North mentioned FCI’s phrases for its tenders had been additionally posing issues. It’s promoting in lot sizes of 100 tonnes on a “high quality as is the place is” foundation. The company presents previous crop and seeks a 100 per cent advance fee.
One of many causes for the provision scarcity witnessed in rice is that farmers are attempting to develop paddy varieties which might be procured by the Meals Company of India (FCI).
A Delhi-based commerce analyst, who didn’t want to be recognized, mentioned because of this, farmers are attempting solely to spice up the yield of those varieties.
Seed trade sources say over 430 paddy varieties are grown in varied agro-climatic situations throughout the nation. That is truly down from the 15,000 varieties grown earlier than Independence. “However the focus is extra on the varieties that farmers can offload with the FCI,” the analyst mentioned.
A North India-based exporter mentioned merchants should not seeking to purchase from FCI as further prices are concerned in shopping for from the parastatal company.
“There are logistics prices of lifting the consignment. Merchants must pay an earnest cash deposit to FCI as soon as the sale is accomplished,” he mentioned.
Poor procurement
The response to FCI auctions is poor as a significant part of the rice-eating inhabitants won’t devour the cereal bought by the company via open market sale. “FCI rice is mainly distributed via the general public distribution system. How many individuals truly devour rice issued via ration outlets?,” the analyst questioned. “The opposite situation is FCI has set a goal to acquire 52 million tonnes (mt) from October 2023. However its procurement is 14 per cent decrease than final 12 months. The company attempting to compete with merchants to acquire can be pushing up costs,” he mentioned.
Rice procurement by FCI for the Centre’s buffer shares throughout October 1-December 31 dropped to 29.93 mt from 34.79 mt a 12 months in the past.
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Planning on cultivating drought-tolerant varieties is being performed out of “ignorance” and officers must give attention to “shoppers desire”, mentioned the analyst. The Centre may even has to re-evaluate manufacturing estimates of earlier years to mirror the bottom actuality quite than merely take a look at meals safety, he mentioned.
Value issue
Merchants mentioned the value of non-basmati rice is ₹42 a kg primarily on account of infrastructure and different prices reminiscent of labour and milling. Many merchants depend on the Central Warehousing Company to retailer rice and it fees ₹14 a bag per thirty days.
“With rice merchants working on a skinny 2-3 per cent margin, such prices must be lowered or managed,” a South India-based exporter mentioned.
The Centre can get a transparent image on manufacturing by asking the States to offer information since they accumulate cess for the cereal traded of their State. Additionally, the Agricultural Produce Advertising and marketing Committees might help with the info they’ve.
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