Tweak FCI's procurement strategies to boost rice exports: Expert panel

For boosting India’s non-basmati rice exports, the government needs to ensure that a higher pool of surplus rice is available to exporters by suitably modifying Food Corporation of India’s (FCI) procurement strategies, a high-powered panel of experts on agriculture exports said.

The panel was constituted by the 15th Finance Commission (FFC) to suggest measurable performance incentives for States to encourage agriculture exports as well as to promote crops that can help in high import substitution.

It comprised of senior representatives from the industry, academicians and former bureaucrats.

The panel said FCI is the largest buyer of rice in the domestic market for Public Distribution System (PDS) – approx. 40 million tonnes annually.

And, with the Minimum Support Price (MSP) increasing year on year it is leading to smaller export surplus and uncompetitive pricing in the international market for Indian non-basmati rice.

A reason perhaps why, despite being the world’s second largest producer of rice, both production and exports have been stagnant over the years.

The panel seemed to suggest that excess FCI buying and increasing MSP’s are the major pain points for Indian rice exports which could be addressed through suitable government policies such as price deficiency payment method (Bhawantar Scheme).

Rice is among the biggest agriculture exports from India along with buffalo meat and cotton. It was India’s single largest commodity with $7.3 billion trade surplus followed by shrimp ($4.6 billion) and bovine meat ($3.6 billion), the panel said.

Rice production in India is estimated to be over 115 million metric tonnes (which includes 6-7 million tonnes of basmati rice).

The panel has identified the crop value chains along with 21 others out of a laundry list of over 340 agriculture and commodities products that needs to developed to enable India increase its agriculture exports from the current $40 billion to over $70 billion in the next few years.

This push will enable an estimated investment of around $8-10 billion in inputs, infrastructure, processing and other demand enablers which will in turn create an estimated 7-10 million additional jobs. Such a boost to exports will also lead to higher farm productivity and farmer incomes.

The other items identified by the panel for value chain development includes shrimp, buffalo meat, raw cotton, grapes, pulses, mangoes, banana, potatoes, honey etc.

The panel also advised creation of a state-led export plan with the private sector playing an anchor role and the Centre acting as an enabler.

It was of the view that the private sector players had a pivotal role to play in ensuring demand orientation and focus on value addition; ensuring project plans are feasible, robust, implementable and appropriately funded.