The paddy prices have started declining after a period of upswing. However, this is yet to be fully reflected in the retail price of rice.

A 60 kg bag of paddy, which was quoted around Rs. 1,400 during the first week of February, now has declined to Rs. 1150, a fall of almost Rs. 4 a kg. But in Tiruchi, a kg of old Ponni raw rice is sold at Rs 57.

Several reasons have been attributed to the decline in paddy prices.

Substantial arrival

Traders, who do not want to be identified, say a major reason is substantial arrival from other States, especially West Bengal, Madhya Pradesh and Odisha. Besides, wholesale merchants and hullers, anticipating severe shortage of paddy due to poor harvest in the State following failure of two monsoons and also the recalcitrance of Karnataka to release water in the Cauvery, made huge purchase from the markets outside the State.

They also visualised that the arrivals to Tamil Nadu from Karnataka and Andhra Pradesh would be poor. “This has pushed up the prices of paddy even in markets like West Bengal by Rs 6 a kg.” Hence, the price of higher quality paddy in Tamil Nadu went up from Rs. 20 to Rs. 27 a kg and that of lower quality from Rs. 14 to Rs. 20 during January-February.

But the scenario changed dramatically during February.

The harvest from the delta has not been as bad as it was expected. Apart from a substantial procurement by the Tamil Nadu Civil Supplies Corporation, the direct procurement centres on an average are said to be getting at least 10,000-15,000 tonnes every day. This is likely to go on for at least a fortnight.

Above all, the unexpected rainfall in the past couple of weeks has enthused the farmers to go in for new crops (with groundwater table showing considerable improvement), “The paddy stocks they have had beyond their capacity have started tumbling out, bringing down the prices,” sources added.

K. S. Jagadeesan, former president of the Tamil Nadu Federation of Rice Mill Owners and Paddy, Rice Dealers’ Associations, admits that the paddy prices have declined considerably and “now there is a total stagnation in the market.”

He pointed out that March-June would normally be a flat season for the paddy\rice merchants because most of the people spend their money on tours and education of their children. “Only by July, rice trade will pick up.”

In order to prevent panic buying during February, Mr. Jagadeesan says the federation secretary, A. Mohan, met government officials, including Collectors, to promise them that the federation was prepared to supply rice at wholesale rate. “This has also cooled down the market considerably and thus brought in some stability”. The prices would further stabilise.

However, the traders would not like to comment on the high prices ruling at the retail level. They say that as those engaged in retail sale invariably supply their items to their customers on credit, the margin has got to be higher.