The Hindu Business Line : Drought likely to hit rice output

New Delhi, Aug.19 The Union Food and Agriculture Minister, Mr Sharad Pawar, said on Wednesday that domestic rice production this year is likely to fall by 10 million tonnes (mt) on account of 246-odd districts — covering nearly half of the country — reeling under drought-like conditions.

“This shortfall in monsoon may result in shortfall in area coverage of paddy by about 5.7 million hectares (mh) as compared with last year and production of rice may be reduced by 10 mt.

Some shortfall in production of oilseeds and sugarcane is also expected,” Mr Pawar told a Conference of State Ministers for Food and Civil Supplies here.

(In 2008-09, the country’s kharif rice output amounted to 84.58 mt on a sown area of 39.66 mh, translating to a yield of 2.13 tonnes a hectare. If acreage falls to 34 mh, production will be only around 72 mt, even assuming no damage to yields. In other words, the output decline may turn out more than the Minister’s 10 mt estimate).

wheat, rice supply

Mr Pawar said that the Centre was willing to supply both wheat and rice from its stocks to State Governments for open market intervention in addition to what was being allocated to them under the targeted public distribution system and various welfare schemes.

“The Central Government proposes to allocate wheat to State Governments at minimum support prices (MSP) plus railway freight. The same principle is being adopted in case of rice where MSP derived price and equated freight will be the cost at which rice will be provided to the State Governments,” he informed.

Taking the current MSP of Rs 1,080 a quintal and a rail freight of Rs 180-200 a quintal, wheat as per this formula would be available to Southern States at below Rs 1,300 a quintal.

As against this, mills in Karnataka and Kerala are currently sourcing wheat from Uttar Pradesh at a delivered cost of Rs 1,300 to Rs 1,350 a quintal. Open market prices have firmed up by around Rs 100 a quintal since June-July.

“The proposed scheme will not help us much because the wheat is to be allocated to State Government and not to us as it is under the regular open market sale scheme,” a Karnataka-based flour miller said.

Mr Pawar expressed concern over the fact that during 2008-09, the Centre had allocated 9.09 lakh tonnes of wheat to States for open market sales, against which a paltry 74,000 tonnes got lifted.

The main reason for this was the abundant supplies in the open market.

But this, according to him, could change because of reduced rice production this year, which may put pressure on availability and prices in the market. He urged States to make best use of the proposed new scheme to “cool down inflationary trends in the food economy.”

No sweet tidings

On the sugar front, Mr Pawar said the Centre was “considering” increasing the levy sugar obligation on mills from the existing 10 per cent of production level in order to make more sugar available through the public distribution system

“Sugar production in the current sugar season has declined from 263 lakh tonnes to about 150 lakh tonnes as against the domestic requirement of 225-230 lakh tonnes which has put pressure on sugar prices. Sugar production prospects for the next sugar season are also not bright,” he added.

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