Voluntary Report - public distribution

**Date:** 4/2/2004

**GAIN Report Number:** IN4030

IN4030

**India**

**Grain and Feed**

**Rice Update - April**

**2004**

**Approved by:**

![](media/image1.wmf)Chad R. Russell

U.S. Embassy, FASNEWDELHI

**Prepared by:**

A. Govindan

**Report Highlights:**

2003/04 rice production has been revised slightly down to 88 million
tons. A significant draw down in government rice stocks and the
continuing appreciation of the Indian rupee against the dollar do not
augur well for large exports, despite prevailing high world prices.

Includes PSD Changes: Yes

Includes Trade Matrix: No

Unscheduled Report

New Delhi \[IN1\]

\[IN\]

# Production Slightly Down ...

Based on recent government estimates, India's MY 2003/04 rice production
is revised down to 88.0 million tons, from the earlier estimate of 89.0
million tons. According to the government's recently revised estimates,
the 2003/04 *kharif* (fall harvested) rice production was higher at 77.8
million tons, compared to its earlier estimate of 75.1 million tons. The
government places the 2004 *rabi* (spring/summer harvested) rice
production at only 10.1 million tons, due to unfavorable weather
conditions in growing regions, taking the total 2003/04 production to
around 88 million tons. Although this is a 15.2 million ton increase
over the drought reduced 2002/03 production of 72.7 million tons, it is
below the record rice production of 93.1 million tons in 2001/02.

# ... Procurement Remains Higher 

Rice procurement by the government under the price support operation in
MY 2003/04 is ahead of last year's level at 17.1 million tons as of
March 5, 2004, compared with 13.3 million tons during the corresponding
period of MY 2002/03, reflecting higher production. With additional rice
procurement of around 3 million tons likely from the *rabi* crop, total
MY 2003/04 procurement is likely to reach around 20 million tons,
compared with 16.4 million tons in MY 2002/03.

# Government Stock Situation Still Critical ...

Assuming a total MY 2003/04 rice procurement of 20 million tons, total
supplies available to the government to meet the requirements of the
public distribution system would be 25.2 million tons (20 million tons
procurement + 5.2 million tons carryover stocks). Assuming a monthly
average offtake of 1.7 million tons, government-held stocks on October
1, 2004, are likely to dip to 4.8 million tons, a critically low level.
Stocks on February 1, 2004, stood at 12.4 million tons, but still
significantly below year-ago stocks of 18.8 million tons (Table 1 and
Figure 1). Higher rice procurement by the government during the current
marketing year helped to marginally mitigate the stock situation, which
on October 1, 2003, had dipped to a ten year low of 5.2 million tons.

**... Which Would Discourage Exports**

Considering the following circumstances, Post does not anticipate
significant rice exports from India in MY 2003/04 and CY 2004, despite
high world demand and prevailing high world prices. The projected low
carryover stocks would discourage the government from allocating any
rice for exports, even unsubsidized (the government's economic cost of
rice is around \$267 per metric ton), during this marketing year. The
prevailing higher world prices should tempt the private trade to source
rice from wherever they can, including the open market. However, the
government has already procured most of the surplus from the 2003/04
harvest, leaving very little for the private trade. Hence, the trade is
unlikely to be in a position to mop up significant quantities for
exports, at least until the 2004/05 crop arrives in the markets in the
Fall of 2004. Furthermore, the cost price of rice to the private trade
on a FOB basis also would be higher than the prevailing world price, at
around \$245 -- 250 per metric ton (25 percent broken). Another factor
speaking against large exports is the continuing appreciation of the
Indian rupee, which so far during this calendar year has appreciated by
3.2 percent against the dollar. Based on shipment data compiled from
private sources, exports from January -- March 2004 were only around
250,000 metric tons, mostly basmati rice and other rice shipped in liner
vessels to Saudi Arabia. Assuming world prices continue to remain strong
through the end of CY 2004, India's CY 2004 rice exports are estimated
at 2.5 million tons. If the firm world rice price trend continues even
longer, MY 2004/05 and CY 2005 exports are forecast higher at 3 million
tons.

# Table 1. Government Procurement, Stocks, and Offtake of Rice (a year ago)

(Million metric tons)

+-------------+--------------+--------------+-----------+------------+
|             | **Stocks**   | **P          | **        | **Offtake  |
|             |              | rocurement** | Imports** | \***       |
|             |              |              |           |            |
|             |              | **           |           |            |
|             |              | Cumulative** |           |            |
+-------------+--------------+--------------+-----------+------------+
| **Feb 1,    | 18.8 (26.1)  |              |           | 1.8 (1.6)  |
| 2003**      |              |              |           |            |
+-------------+--------------+--------------+-----------+------------+
| **Mar 1**   | 17.6 (26.0)  |              |           | 2.4 (2.3)  |
+-------------+--------------+--------------+-----------+------------+
| **Apr 1**   | 17.2 (24.9)  |              |           | 1.6 (1.7)  |
+-------------+--------------+--------------+-----------+------------+
| **May 1**   | 15.3 (24.5)  |              |           | 2.4 (2.4)  |
+-------------+--------------+--------------+-----------+------------+
| **Jun 1**   | 13.2 (23.4)  |              |           | 2.6 (2.4)  |
+-------------+--------------+--------------+-----------+------------+
| **Jul 1**   | 11.0 (21.9)  |              |           | 2.9 (2.1)  |
+-------------+--------------+--------------+-----------+------------+
| **Aug 1**   | 8.1 (20.1)   |              |           | 1.0 (2.5)  |
+-------------+--------------+--------------+-----------+------------+
| **Sep 1**   | 7.1 (17.5)   | 16.4 (21.3)  |           | 1.9 (1.9)  |
|             |              | 1/           |           |            |
+-------------+--------------+--------------+-----------+------------+
| **Oct 1**   | 5.2 (15.8)   |              |           | 1.9 (2.0)  |
+-------------+--------------+--------------+-----------+------------+
| **Nov 1**   | 5.7 (20.5)   |              |           | 1.5 (1.6)  |
+-------------+--------------+--------------+-----------+------------+
| **Dec 1**   | 10.9 (20.3)  |              |           | 1.7 (1.8)  |
+-------------+--------------+--------------+-----------+------------+
| **Jan 1,    | 11.7 (19.4)  |              |           | 2.0 (1.8)  |
| 2004**      |              |              |           |            |
+-------------+--------------+--------------+-----------+------------+
| **Feb 1**   | 12.4 (18.8)  | 17.1 (13.3)  |           |            |
|             |              | **2/**       |           |            |
+-------------+--------------+--------------+-----------+------------+

\* Includes exports

**1/** Cumulative procurement: October 1, 2002 to September 30, 2003

2/ Cumulative procurement: October 1, 2003 to March 5, 2004

Source: Department of Food and Public Distribution, GOI

![](media/image2.wmf)

**Table 2: Commodity, Rice Milled, PSD**

  ------------------- ----------- ------------ --------- ------------ --------- ------------- --------------
  **PSD Table**                                                                               

  **Country:**        **India**                                                               

  **Commodity:**      **Rice,                                                                 
                      Milled**                                                                

                                  **2002**               **2003**               **2004**      UOM

                      Old         New          Old       New          Old       New           

  **Market Year                   **Oct-02**             **Oct-03**             **Oct-04**    (MONTH/YEAR)
  Begin**                                                                                     

  Area Harvested      40,000      40,400       44,000    44,000       44,500    44,500        (1000
                                                                                              Hectares)

  Beginning Stocks    24,480      24,480       11,060    11,000       12,500    12,500        (1000 MT)

  Milled Production   75,700      72,700       89,000    88,000       90,000    90,000        (1000 MT)

  Rough Production    113,561     109,061      133,513   132,013      135,014   135,014       (1000 MT)

  Milling Rate(.9999) 6,666       6,666        6,666     6,666        6,666     6,666         (1000 MT)

  TOTAL Imports       0           0            0         0            0         0             (1000 MT)

  Jan-Dec Imports     0           0            0         0            0         0             (1000 MT)

  Jan-Dec Import U.S. 0           0            0         0            0         0             (1000 MT)

  **TOTAL SUPPLY**    100,180     **97,180**   100,060   **99,000**   102,500   **102,500**   (1000 MT)

  TOTAL Exports       5,440       5,440        2,750     2,750        2,000     3,000         (1000 MT)

  Jan-Dec Exports     4,421       4,421        2,500     2,500        2,000     3,000         (1000 MT)

  TOTAL Dom.          83,680      80,740       85,000    83,750       86,500    85,500        (1000 MT)
  Consumption                                                                                 

  Ending Stocks       11,060      11,000       12,310    12,500       14,000    14,000        (1000 MT)

  **TOTAL             100,180     **97,180**   100,060   **99,000**   102,500   **102,500**   (1000 MT)
  DISTRIBUTION**                                                                              
  ------------------- ----------- ------------ --------- ------------ --------- ------------- --------------