2022 will be a unique year for Indian agriculture. Both staple crops wheat and rice seem to be suffering from production losses
The Food Security update for August 2022 highlighted how concerns about the possibility of a ban on exports of rice by India are growing. It also noted it was noted that “exporters, concerned that export restrictions will be introduced (as has been done for wheat), are moving quickly to open letters of credit and have signed contracts to export 1 million tonnes of rice from June through September 2022.” But do these fears really exist? Are there any reasons to anxiety in the context regarding Indian rice? Our analysis suggests that although there isn’t a obvious threat to the security of India’s food supply however, the window for Indian rice exports in the coming year could be limited.
Between 2021 and 22nd of the year, India produced about 130.29 million metric tonnes (MMTs) of rice. The majority from this (about 112 million tonnes) was harvested through the Kharif season (sown in the months of June/July and harvested between November and December). The remainder of 14 percent was harvested in winter months of this Rabi season.
According to NITI Aayog’s projections of demand and supply the projected consumption of India in 2022-23 is between 108 and 109 MMTs of rice. Apart from the central pool of stocks of rice that are held by the government and private sector, the private sector keeps some rice stocks which fluctuate during the crop year. However, if we consider that we have that there are no opening and closing rice stocks, it is evident that in the this year, the country generated an surplus of around 22 MMT (130.29 to 108.28). This is about the quantity of rice exported out of the nation in. However, this may not always be the case because stocks both in FCI and the Food Corporation of India (FCI) and private sector play a significant part in India’s balance report.
Issues with the rice crop in India this year
The year is underway and there have been news reports of lower paddy acres and yield. However, it’s not just the coverage of the area which is less than the previous year. There have been reports of the drying of the transplanted paddy crops in fields, primarily because of the insufficient irrigation. There are believed to be three causes to this. One is that there are insufficient rains in the major paddy-growing states that include Uttar Pradesh, Bihar and West Bengal, which produce approximately one-third of India’s paddy. A second issue is the shrinking of rice plants due to an Southern the Rice Black Streaked Dwarf virus (SRBSDV) attack and third, more lucrative incentive for prices of sister crops such as cotton, soybeans and.
Kharif is the principal time for cropping in India and is based upon monsoon rainfall. More than 52 percent of India’s cropped total is guaranteed to be irrigated, according to information obtained from the Ministry of Agriculture. This implies that approximately 48 percent of the land is dependent entirely on monsoon rains to provide irrigation. Even in areas that are irrigated the need for rain is to decrease the dependence on diesel and electricity. Therefore, if there’s a severe deficiency in the rain, crop production and the associated costs are likely to be adversely affected.
As of the 29th August, 2022, the Indian monsoon rainfall average around 7 percent over their average long-period value (LPA). Incredibly, the LPA value itself has been reduced during the year in view of the declining quantities of Indian monsoon rainfall over time. Despite a decent monsoon count for all of India the states of six Union Territories have experienced deficient rainfall. The states that have been affected include Uttar Pradesh (with a rain deficit of 44 percent), Bihar (with a deficit of 39 percent), Jharkhand (deficit of 26 percent), Manipur (deficit of 44 percent), Tripura (deficit of 28 percent) along with Delhi (deficit that is 31 percent). Up until recently, West Bengal was also included in this category. However, a recent surge in rains has lifted the measure of rain, even though it is still showing an overall deficit of 18 percent.
Not only problems, this season has also witnessed flooding, such as that in Madhya Pradesh, and increased frequency of rains over less time, as is the case in Maharashtra.
To compensate for the lack of time, farmers in states such as Bihar as well as UP have moved to varieties with shorter durations of paddy. Some have even switched to cultivating pulses such as moong, which require less irrigation water. This has resulted in smaller acreage, and less expectation of the paddy harvest this year.
In addition to rain, virus outbreaks in northwestern states Punjab and Haryana reduce tillage of paddy fields. For farmers living in some regions within these two states it is a double issue. The first was that wheat shriveled due to the historic levels of heat in the crucial harvesting months between the months of March through April in 2022, and this year, the paddy crop has been infected with the virus. Thankfully, the outbreak is restricted to a few areas of the states. However, for some farmers in Punjab it is possible that the virus actually be in the middle of the third bad cycle of crop following their cotton crop being seriously damaged by the pink bollworm in the month of October, 2021. This year is shaping up as extremely challenging for these farmers. Punjab is the source of about 10% of India’s paddy. effects that the virus has on the rice crop remains to be determined by researchers.
In the end, it seems that the paddy crop in India this year is expected to be lower than that of last year. Our market analysis along with media news reports indicate that the decrease could range from 10 and 15 percent.
Projection Indian R balance sheet of ice for 2022-23
Utilizing the same rice balance sheet method We estimate the “window of exports” this year. We design scenarios of production estimates, and use these to determine the amount of paddy for the year in question. After comparing the availability with the domestic demand for paddy we determine the remaining paddy of the system that we refer to as the “window of export’ of the country. In our case of base we will assume that the crop of the year to be similar to the previous season’s (130.3 MMTs). Based on our regular market analysis, we introduce shocks to Kharif paddy yield (10 percent, and 15 percent) and develop 3 scenarios (Table 1.).
Based on these estimates, we conclude that, in contrast to 2021-22, which saw India exported 22 million tonnes of rice, the export window in 2022-23 is expected to be significantly smaller, ranging between 12 and 17 MMTs.
We’ve constructed a few assumptions that: one, the paddy allocations under the PM Garib Kalyan Ann Yojana (PMGKAY) will cease starting in September 2022. Two three, it is likely that the Indian government will be holding paddy in line with those of the buffer stocks norms as of October 2023. Three, Rabi paddy is likely to remain the same like the previous year.
In the event that Pradhan Mantri Garib Kalyan Anna Yojana (PMGKAY) is to cease and the market is open, the rice supply for exporters will be reduced, which will shrink the export window even further. If purchasing rice follows in the same pattern as the last three years (procuring approximately 50-70 millon tonnes of rice) which results in higher quantities than buffer standards, the window could shrink even more.
Situation of domestic inflation in rice
Despite being low, the domestic rice price indexes have been rapidly growing upward momentum. (Figure 2).
There’s no reason to be panicked.
The year 2022 is proving as a unique year in Indian agriculture. Both staple crops like wheat and rice seem to be losing production.
The projections above show that even though the export window is less this year, it appears to be no danger to the security of the food supply in the country. Additionally, it is important be aware that India has the Rabi paddy season in contrast to wheat, which is planted during winter. Even though it’s tiny, Rabi paddy can cover certain gaps in Kharif paddy.
But it is an important month for paddy, as it is the month in which the crop is most vulnerable to pest attacks. The performance of the crop during the month of September will need to be watched closely.
Some policies should be reconsidered
We believe that the release of rice out of FCI stocks to meet goals under the ethanol blending program is not wise. With the possibility of climate change becoming an inevitable reality, India needs agility and real-world policies. The timely release of precise data could aid efforts by the government to adapt policies to new scenarios, in order to avoid knee-jerk reactions as well as abrupt restrictions in the Essential Commodities Act are avoided.
The destruction to wheat crops caused by extreme heat in March as well as the erratic monsoons across major rice-producing states has demonstrated that climate change can’t be put off for much longer. Therefore, government policies must ensure that farmers are informed ahead of time, in line with the climate conditions. The policies on procurement, production trade, import, and export need to be adjusted to be flexible so that the new scenario arising of adverse climate conditions is quickly considered. The funding to support the National Initiative on Climate Resilient Agriculture (NICRA) must be increased to ensure that superior seeds can be developed to withstand extreme climate conditions.