Agri Business

Paddy prices under pressure in West Bengal

Shobha Roy Kolkata | Updated on September 23, 2020

Expectations of a bumper output, drop in export to Bangladesh weighing on prices

West Bengal is likely to record a bumper production of kharif paddy this year. But this is no good news for farmers of the State as prices have already started moving south. Lacklustre demand in the domestic market plus drop in export to neighbouring Bangladesh are weighing on market sentiments.

In April, the prices of paddy in West Bengal surged in the wake of the pandemic by nearly ₹100 a quintal to ₹1,616. By July-August, the prices moved to nearly ₹1,770 a quintal on the back of steady procurement (of the winter crop) by the government.

However, with the distribution of free rice by the State and Centre in the subsequent months, the prices in the open market started inching down. As on date, paddy price in the open market is around ₹1,617 a quintal against MSP of ₹1,868. According to trade sources, the open market price of paddy is likely to decline further as fresh arrivals start next month; also, there is uncertainty over exports to Bangladesh.

“Between September and February every year (9 lakh tonnes last year), a good quantum of non-basmati rice is exported to Bangladesh and this keeps prices firm in the domestic market. However, this year the Bangladesh government has levied 55 per cent import duty, and hence there has been no orders. This is what is putting prices under pressure,” said Suraj Agarwal, CEO, Tirupati Agri Trade.

Procurement, output

West Bengal, which produces close to 15-16 million tonnes of paddy each year across the three seasons and accounts for nearly 14 per cent of the country’s total production, is likely to witness higher crop this year. The “better than optimum” rainfall received during the season is likely to push up the yield of the crop this year, said sources in the State agri department.

Pradip Kumar Mazumder, Chief Advisor (Agriculture) to the Chief Minister, said, “In terms of area under cultivation, we are already saturated, so there is no increase, but given the supportive weather, the yield this year is likely to be higher than previous year.”

That said, procurement in Bengal is not likely to be any higher this year, say trade sources.

The State has always seen only limited procurement; 70 per cent or more of it is actually only sold in the open market where prices fluctuate depending on demand and quality. According to Sushil Kumar Choudhury, President, Bengal Rice Mills Association, the procurement by the State government last year was 49 lakh tonnes (lt) against the target of 52 lt. This year too, he says, not more than 50-52 lt may be procured.

Given that the production is likely to be higher than last year, prices are likely to fall further unless the government steps up its procurement this year, a rice mill owner said on conditions of anonymity.

Published on September 23, 2020

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