India's rice output could climb 5% this year

Mumbai: India, the world's biggest grower of rice after China, may produce 5 per cent more this year after monsoon rains spurred planting, a gain that may help the nation ease export curbs.

Production of the monsoon crop will exceed 84 million metric tonnes, T. Nanda Kumar, India's federal food secretary, said in New Delhi on Tuesday.

A bigger harvest may prompt India to ease export curbs, pressuring global prices that have already dropped 33 per cent from a record in April. Thailand and Vietnam, the world's biggest rice shippers, have raised export forecasts this year as farmers planted more in response to higher prices.

"We'll wait till October before we take any decision on relaxing exports," said Kumar, who is responsible for food policy in the world's second-most populous country. "We need to see the actual crop size. Exports as food aid will continue."

Prime Minister Manmohan Singh's government has restricted exports of rice, wheat, corn and cooking oil to tame inflation that's at a 16-year high. Singh faces elections in less than a year and higher food costs can mar poll prospects in a country where more than half the people survive on less than $2 a day.

India banned rice exports in April to rein in prices after demand for the grain in government welfare programs doubled in five years. China, Vietnam and Egypt also curbed sales to boost local supplies, threatening food security in nations from the Philippines to Nigeria.

'Stockpiles comfortable'

"The government should allow limited exports as there's no logic in keeping a blanket ban," said Vijay Setia, president of the All India Rice Exporters Association. "The crop is looking better, prices have fallen and stockpiles are comfortable. Everything is in favour for easing the ban."

Farmers in India planted rice to 28.2 million hectares as of Aug. 18 compared with 25.6 million hectares a year earlier as the June-September monsoon, which accounts for four-fifths of the country's rainfall, remained above normal for a second week.

The monsoon was 36 per cent above average in the week ended August 13, according to the weather office. Rains were 2 per cent above average between June 1 and August 13, the agency said.

The government plans to create a 2 million tonnes strategic reserve from this year's rice crop as the South Asian country takes measures to safeguard supplies, Kumar said. It has built an emergency reserve comprising 3 million tonnes of wheat from this year's record harvest, he said.

Rice prices climbed to a record $25.07 per 100 pounds in Chicago April 24.

No ban on exports

India, the world's second-biggest sugar producer, will limit exports to rein in domestic prices that have risen to more than a two-year high in the past two months amid forecasts of a smaller crop.

"We are not unduly worried and we have enough to keep prices in a certain price band," Federal Food Secretary T. Nanda Kumar, said in New Delhi. "At this stage, no," he said, responding to speculation that the government may ban sales abroad to curb prices.

Wholesale rates at Vashi, a Mumbai suburb and the nation's biggest sugar market, have reached Rs19,730 ($453) a metric tonne, exceeding prices on London's Liffe exchange, a benchmark for refined sugar. That has prompted mills to hold off signing new export contracts, Narendra Murkumbi, managing director of Shree Renuka Sugars, the nation's biggest refiner, said on August 4.

"Producers will prefer to sell more in the local market," said Arhant Jain, executive president finance at Dhampur Sugar Mills, India's third-biggest producer by sales.