Rice producer stocks a mixed bag as paddy sowing shrinks

Shares of major rice producers saw mixed moves on Tuesday after official data showed a 15 percent year-on-year fall in the country's paddy sowing area thanks to an uneven monsoon.

KRBL and Kohinoor Foods shares rose 4.3 percent and 3.1 percent respectively, but Sarveshwar Foods, Chaman Lal Setia and LT Foods fell around one percent each.

India’s paddy production is likely to see a significant fall in the current year, owing to a big drop in the paddy sowing area.

According to data from the agriculture ministry, the area covered under paddy stood at 274.30 lakh hectares (LH) as of August 5, as against 314.14 LH in the corresponding period a year ago.

In West Bengal, the largest rice-producing state, the area under paddy was down 31 percent on a year-on-year basis.

Based on trade estimates, paddy sowing for the 2022-23 crop year (July-June) is expected to decline by at least 10 million tonnes (MT) from last year's record level of 129 MT.

“Rice production is a concern. The areas under rice are about 12.5 percent lower than last year. In several states even though the planting has been done but due to lower rainfall, the productivity is going to be much lower. So we can easily expect loss in production of 10 million tonnes,” Ex-Agricultural Secretary Siraj Hussain told CNBC-TV18.

Rice prices may also rise if Kharif production declines since the season accounts for around 80 percent of the country's rice production. It could have a negative impact on food inflation. Experts believe that this could also affect global rice supplies.

“India has about 40 percent share in global export of rice. Our rice production is exported to a lot of countries in Africa, Asia and Bangladesh. So if there is loss of production or if there is any restriction on the export of rice, then these countries will suffer,” added Hussain.

Meanwhile, the food ministry has called a meeting of 25 rice-producing states and Union territories (UTs) on August 30 to determine procurement targets for the next marketing year (2022-23), which begins on October 1.