The rice market is witnessing a shake-up this year, especially in the rice bowl of Andhra Pradesh (the two Godavari districts and Krishna). This is mainly in view of the new levy policy of the Centre, drastically reducing the quantity they will have to give for the public distribution system and buffer stocks.

Earlier, millers used to buy paddy vigorously from farmers in the two Godavari districts and supply rice to the FCI.

They had to give FCI 75 per cent of what they bought from growers. In return, they were given permits to sell the rest of 25 per cent in the domestic market or for exports.

From this crop season, the ratio has been reversed and millers have to give only 25 per cent as levy and retain the rest can be sold in the open market.

Millers are finding the reversal disconcerting and many of the millers even want the Government to buy the paddy from farmers at MSP and give it to them for milling – the kind of custom milling prevalent in Punjab and Haryana. Custom milling has never been the practice in AP in the past.

Rice exporters have reacted to the change in levy policy in a positive manner, as there will be exportable surplus in the market, and it may lead to spurt in exports.

But exporters are also wary as millers in Andhra Pradesh have not yet made the necessary adjustments.

AP Rice Exporters’ Association President Vinod Kumar Agarwal is of the view that the Government should adopt a consistent levy policy and encourage rice exports.

“With this change in levy policy, it is now all the more necessary to encourage non-basmati rice exports, as otherwise the farmers will not get the MSP. It is a fact that many of the small millers do not have the holding capacity and the problem is also compounded in the two Godavari districts by the fact that the varieties grown here – 1001 and IR 64 – are either given as levy to the FCI or exported to African countries. They are not locally consumed. It is all the more difficult for the millers to adjust to the new policy. Therefore, they should be allowed to sell freely to the exporters. There should not be any curbs on the export market,” he said.

He said the Government should extend a helping hand to the millers in adjusting to the new system and “it is no wonder that many millers now want custom milling in AP also as in Punjab and Haryana.”

BV Krishna Rao, Managing Director of Pattabhi Agro Foods Pvt Ltd, a leading rice exporter, is of the view that inspite of the transitional travails the new policy will be of help to all in the long run.

“Certain adjustments have to be made. Farmers have all along been cultivating common varieties for the levy or for exports. Now they have to grow fine varieties. Exporters also have to search for new markets for these varieties instead of relying on African countries alone. It is a fact that right now rice millers are in a spot of bother because of the new policy. But any change entails some difficulty,” he said.

He expects that there may be considerable spurt in rice exports through Kakinada port during 2015, by roughly a million tonnes or so.

During 2014, the rice exports totalled 2.4 million tonnes.

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