With Tamil Nadu farmers aiming for an all-time record production of grains this year, the focus turns to the impact of a bumper harvest on the price of rice.
The opinion is divided among a cross-section of experts, officials, farmers and traders on whether a record yield will lead to a sharp fall in the price.
While one group contends that there is every reason to be optimistic of a considerable reduction in the price of rice because of a likely improvement in supply, the other group feels that the price may rule steady or go up a bit, as there is no correlation between the production and the price. However, both agree that the price is governed by a variety of factors, of which production is one.
Officials of the Agriculture Department are confident of achieving 140 lakh-145 lakh tonnes of grain this year, with paddy accounting for 90 lakh tonnes. The State produced 75 lakh tonnes during 2011-2012 and 70 lakh tonnes last year.
According to D. Thulasingam, president of the Federation of Tamil Nadu Rice Mill Owners and Wholesale Dealers Associations, a conservative estimate reveals that the State’s annual rice requirement is around one crore tonnes, of which two-thirds comes from the State and the rest from other States, including Andhra Pradesh and Karnataka. This does not include the paddy procured by the Tamil Nadu Civil Supplies Corporation for the Public Distribution System, which requires 52 lakh tonnes of paddy or 36 lakh tonnes of rice.
A senior government official says that besides the production in Tamil Nadu, one more factor has to be taken into account this year. With the Central government’s stand against the State governments giving incentive over and above the minimum support price, the chances are high for greater availability of rice in the open market as many States may fall in line with the Centre’s stipulation, bringing down the prices.
However, K.R. Shanmugam, Director of the Madras School of Economics, says there will not be much change in the prices of rice as the State has reached a fairly high level of production, and any increase will only be marginal. Besides, the monetary policies of the Reserve Bank of India play a crucial role in pushing up or down the rate of inflation. Mr Thulasingam says labour cost is an important component of the price, and it is only on the rise.
