Govt raises rice buy aim on robust levy arrivals

The government—buoyed by a surge in rice buys over the last few weeks—has raised its procurement target for the current season ending September 30 to 32 million tonnes, a senior government official said on Thursday. Last year, the procurement was a record 33.6 million tonnes.

“Rice procurement is going better than expected and we now expect it to touch 32 million tonnes as against the earlier target of 28 million tonnes,” a senior government official said.

The government had, initially in the season, pegged the 2009-10 (October-September) rice buys at 30 million tonnes, but had subsequently lowered the procurement estimate to 28 million tonnes on concerns of a drop in output.
 

HIGH HOPES                                             (in million tonnes) State-wise rice procurement as on Tuesday:
State	2008-09	2009-10	Change
Andhra Pradesh	7.183	5.767	-19.7
Bihar	1.010	0.822	-18.6
Chhattisgarh	2.554	3.109	21.7
Haryana	1.425	1.816	27.4
Kerala	0.234	0.260	11.1
Madhya Pradesh	0.198	0.174	-12.1
Maharashtra	0.230	0.201	-12.6
Orissa	2.357	2.138	-9.3
Punjab	8.531	9.273	8.7
Tamil Nadu	1.114	1.066	-4.3
Uttar Pradesh	3.611	2.663	-26.3
West Bengal	1.274	1.096	-14.0
Total*	30.295	28.860	-4.7
*The total may not tally as some states have not included in the table

The official said rice procurement had already crossed 28 million tonnes this season, and given its strong pace, it was now seen at around 32 million tonnes.

He said rice procurement was lagging seven to eight per cent on year in February-March. The gap had narrowed to around four per cent and may narrow even further as rice inflows from mills had increased.

“Milled rice inflows from rice mills have picked up over the last few months as open market prices for some grades of rice are lower than the government’s purchase price,” the official said.

Under levy orders, it is mandatory for rice mills to sell a certain percentage of their total paddy buys to the government after milling.

The official said millers were selling more than the mandatory limit of rice to the government as open market prices were lower.

The government is purchasing common grade paddy from farmers at Rs 1,000 a quintal and fine grade paddy at Rs 1,030 a quintal.

From mills, it is buying milled rice at around Rs 1,650-1,750 a quintal. The price varied across states after factoring in milling costs and effective procurement price of rice, taking paddy to rice conversion at around 67 per cent.

Open market price of raw permal—a common grade rice variety—is currently around Rs 1,650-1,670 a quintal.

Open market rice prices have eased over the last few months as production estimates for the crop have been raised. The government now expects rice output in the current crop year ending June 30 at 89.3 million tonnes, up from its February estimate of 87.6 million tonnes.