The government is facing the prospect of a substantial surplus in rice stocks by the end of the current procurement season 2023-24 (October-September), if steps to offload grain are not initiated soon. This could jack up the food subsidy expenditure, given the rising costs of grains storage and potential losses from damages, reported Financial Express.
As per media report, projections indicate that the rice stocks held by the Food Corporation of India (FCI) are expected to exceed twice the buffer by the end of the current season, owing to robust procurement efforts by agencies and high opening stocks. Currently, the FCI holds 19.44 million tonnes (MT) of rice, surpassing the buffer of 7.61 MT for January 1. This figure excludes the 23 MT of grain awaiting receipt from millers.
Officials report that, during the ongoing procurement drive that began on October 1, the FCI and state government agencies have collectively purchased around 17 MT of rice-equivalent paddy. The overall grain purchase for the current kharif season is projected to surpass 50 MT, exceeding the annual requirement of approximately 40 MT for the free ration scheme, Pradhan Mantri Garib Kalyan Anna Yojana (PMFBY). An additional 5-6 MT of rice is expected to be procured during the Rabi season.
The opening stock of rice with FCI on October 1 was 22.18 MT, more than double the buffer, and with further procurement in the current season, officials anticipate a further increase in stock levels.
As per media report, to address the surplus, the government needs to implement policy initiatives, particularly since the surplus stocks have been accumulating since December 2023 when the additional 5 kg of rice to 800 million beneficiaries under PMGKAY (launched in April 2020 for COVID-19 relief) was discontinued. Approximately 16 MT of rice is surplus annually after allocation under the free grain scheme and meeting buffer requirements. The government’s decisions, such as not allowing states to buy rice under the Open Market Sales Scheme (OMSS) from FCI and halting rice supplies for ethanol production, have contributed to the stockpile.
In the 2022-23 ethanol supply period (October-November), the government supplied 1.3 MT of rice from FCI for biofuel production. Under the current procurement system, paddy procured from farmers by FCI and state agencies is handed over to millers for conversion into rice, with a conversion ratio of 67%.