Export policy should protect farmers, local market

By Nantoo Banerjee

The government’s latest policy to allow the export of non-basmati white rice could not have come at a more appropriate time as farmers are getting ready to harvest the country’s most important autumn crop, rice. In the absence of proper storage facilities in the country, the surplus needs to be either sold at a discount in the domestic market or exported to earn a decent price. India is expected to set a new rice production record during the current year.

While the government has set a domestic rice production target ranging from 135.5 million metric tons to 139 million tons for the year, the US Department of Agriculture (USDA) has projected India’s rice production would reach an all-time high volume of 138 mt. According to Commodity Insights, the rice production could be around 135.5 mt, matching the record harvest of 2022-23. The government’s decision to allow export of select varieties of rice will hopefully stabilize the domestic as well as international market, benefiting both farmers and consumers.

India has acquired the distinction of being the world’s largest rice exporters by both value and volume. In 1922, when the country registered a record production of rice, its export earnings aggregated at $11.1 billion. India was far ahead of other major world rice exporters, including Thailand, Vietnam, Pakistan, the US, China, Myanmar, Cambodia, Brazil and Uruguay. But for selective restrictions, India could export more.

Rice and wheat are considered to be highly sensitive commodities – critical food security staples – for both the government and private speculators. It is hoped that India will continue to remain a top player in the global rice market in 2024-25, with exports projected to reach around 18 million tonnes. Although this would be about two million tonnes more than the previous year, but it would still be lower than the record 22 million tonnes exported in 2021-22.

Thanks to the good monsoon across most parts of the country, rain-fed kharif crop production is expected to do extremely well this year. Farmers are highly happy. And, so is the government. Alongside paddy, other crops such as pulses, oilseeds, sugarcane and cotton are also expected to do well this year. The short-run sugar cane crushing season has just begun. Last week, the union agriculture ministry indicated that the acreage under kharif crops had risen 1.87 percent year-on-year to 110.85 million hectares as of 27 September, surpassing the five-year average. Last year’s coverage was 108.82 million hectares. The current sowing of kharif crops surpassed the five-year average of 109.6 million hectares,

While removing the export ban on non-basmati white rice, the government has fixed a minimum export price of $490 per ton. It has halved the duty on parboiled rice from 20 percent to 10 percent to ease the export trade to the East and South-East Asian markets. To begin with, India has allowed export of 200,000 tons of non-basmati rice to Malaysia. Incidentally, Indonesia and Malaysia are major suppliers of palm oil to India. Last year, India, the world’s biggest exporter of rice and onions, had imposed restrictions on shipment of rice, onions and a few other commodities to keep domestic prices under check. This year, Malaysia is facing severe drought and heatwave which have affected about 52,609.13 hectares of paddy fields. Inadequate irrigation in key paddy-growing regions in Malaysia has impacted crops. The annual target for rice production is 60 percent, but the Self-Sufficiency Level is expected to decrease to 50 percent this year.

Fortunately, India has been somewhat lucky that the country has not faced severe droughts in recent years despite the El Nino effect on parts of the country, last year. On the whole, 55 per cent of India’s net sown area is rain-dependent and it grows 34 of the country’s 40-odd major crops. In 2023, a rainfall deficit of six percent in the country resulted in lower agricultural production in Assam, Manipur, Mizoram, Jharkhand, Bihar, and Kerala. The country receives around 85 percent of its annual rainfall during the southwest monsoon season generally covering four months — from June to September. During this year, monsoon made a delayed entry in some parts of the country, including paddy growing states such as West Bengal, Assam, Odisha, Jharkhand and Bihar. However, the rain deficit was more than covered in September. There is no immediate sign of the rainy season ending too soon.

However, the country’s future of agricultural production faces many challenges. The biggest of them is the limited water resources with water for irrigation increasingly competing with growing needs of industry, urban centres and the country’s increasing population. Independent India’s population in 1947 was only 30 crore which jumped up to 35.9 crore within three years. The country’s population has grown dramatically since 1950, and is expected to continue to grow. As of October 3, 2024, India’s population is 1,454,250,931, according to the Worldometer. This makes India the most populous country in the world, sharing 17.78 percent of the total global population. Interestingly, a vast majority of India’s poor and small farmers are concentrated in rain-fed areas and the eastern Indo-Gangetic plains. Climate change, soil erosion, and biodiversity loss are among other challenges.

For now, the government’s rice export policy may look alright, but the future remains uncertain about adequately feeding the country’s still growing vast population. The quantity of rain and its spread will continue to play a critical role in India’s annual grains production. Ideally, India should build a large storage capacity for surplus gains rather than indulge in exports to earn a few billion dollars. A drought in India will hit the world granary shooting up prices of all farm products. Lately, the government announced the ‘World’s Largest Grain Storage Plan in the Cooperative sector’ to address the shortage of food grains storage capacity in the country. The success of a project of this nature will hold the key to the country’s food security and dealing with surplus production of food grains in a given year. (IPA Service)

Published Date: October 9, 2024