Rice Industry – Emerging Contours Report

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Context

Recently a report - Rice Industry – Emerging Contours was released by rating agency Infomerics Valuation and Rating.

Highlights

The report is optimistic about the future of the rice industry in India.
It highlights the need for a comprehensive rice strategy, with focus on new systems, technologies and new rice seed varieties.
It lists the government initiatives on bringing about structural changes in the sector and the efficient ways to reduce the extent of dependence on the vagaries of the monsoon.

Challenges

The report said that the rice production is beset with a variety of risks.
High fertilizer price, plummeting water table, soaring agricultural input prices and asymmetric market price information constitute risk factors.
Other issues include high rent charges of agricultural machinery, poor transportation, poor consultancy facilities and adequacy, timeliness and cost of credit.
Diverse setting significantly impacts seasonal concentration, spatial spread, and loss of about 10 per cent of paddy/rice in processing, storage and transport.
Heterogeneity of rice milling mills in terms of kind, capacity, location, services and ownership make the application of any standard investment, cost and return template difficult.
The report added that there are three main risks for the rice sector in the country - container shortage, scanty rains and low MSP coverage.

Scenario in 2021:

About 25,000-30,000 containers are lying at ports because of disputes with Customs, etc.
Basmati rice exports have been hit hard because 80 per cent is routed through containers.
Erratic rainfall could affect crop production.
Farmers have planted hectares of land with rice this year with fears of scarce rainfall although the Indian Meteorological Department has forecast the country will receive normal monsoon rains in 2021.
Insufficient MSP realization is reflected in paddy households selling their produce to the APMC reducing from 17 per cent (2013) to 2.7 per cent (2019) because of poor participation of private traders, low infrastructure, unawareness, etc.

Way Ahead

Paddy/rice production in India cannot be considered in silo; it is inextricably linked to the broader question of land rights and land ownership, food security, political stability, preservation of natural ecosystems and agricultural diversification.
Stringent international food quality and safety standards of E.U., U.S., and Japan can help to enhance the quantity and quality of organic production.
Since Indian agriculture continues to be a gamble in monsoon, risk mitigation measures, crop insurance, price stabilization measures, stress on geographical indicators (GI) of basmati rice in India and optimum use of agro-climatic conditions can reduce the dependence on the monsoon.