India faces rice storage crisis as another record harvest likely this year

By Pratik Parija

 

India’s stash of rice is running at the highest for this time in at least two decades, raising the risk it will run out of room to store it all as another record crop looms. 

Overflowing reserves — equal to more than one-tenth of the annual global production — are becoming a headache for the world’s second-biggest grower as authorities struggle to create extra storage. Forecasts of above-average rains have raised expectations that the nation will reap another bumper crop this year, increasing the risk of the grain rotting in open storage facilities. 

 

“Our outlook for Indian production is favorable, pointing to another record Indian crop being harvested in 2025-26,” said Shirley Mustafa, an economist at the United Nations’ Food and Agriculture Organization. The arrival of the new crop in September and October raises the prospect of increased supply pressure on public granaries, she said. 

 

India is the world’s top shipper, and its move to ease export restrictions has helped push Thai prices — an Asian benchmark — down almost 40 per cent from a 15-year high in January 2024. Still, the country’s swelling surplus shows its struggle to find enough demand to meet rising supply. Global stockpiles are expected to reach a five-year high in the coming season, which could keep prices under pressure.

 

Rice acreage in the South Asian nation jumped 58 per cent from a year earlier as of June 20, helped by the early onset of monsoon, according to the farm ministry. Planting will be completed in most parts of the country by the middle of August.

 

India heavily influences the global rice market, Mustafa said. “But we also have to see how crops fare in competing suppliers and in important rice buyers.”

 

Inventories totaled almost 39 million tonnes this month, according to the state-owned Food Corporation of India. It’s also holding more than 32 million tonnes of the unprocessed grain, equivalent to about 23 million tonnes of rice, data showed. The country maintains wheat and rice reserves for various welfare programs, including 5 kilograms of free grains per person every month to needy people. 

 

The government has already approved 2.4 million tonnes of rice to be funneled into ethanol to help stem the surplus, a highly unusual move for the important food staple, and a bigger crop could spark more. 

 

Still, more than 140 million people remain excluded from the food distribution program, due to the continued use of decade-old population data to calculate beneficiaries. India plans to spend about 2 trillion rupees ($23 billion) in the fiscal year ending on March 31 to run the world’s biggest food program. 

 

The federal government purchases cereals such as rice and wheat from farmers at guaranteed prices and distributes the grain to about 800 million people through a vast network of retail shops. These assured prices aim to shield farmers from distress sales in the open market.