Rains to boost India rice production

India, the world's largest grower of rice after China, may increase production by five per cent this year after monsoon rains spurred planting, a gain that may help the nation ease its curbs on exportation. Harvests of the crop, which relies on increased rains during the monsoon season, will exceed 84 million tons, said T Nanda Kumar, India's federal food secretary.

A bigger yield, as well as prompting India to ease the limits it has set on exportation, may also reduce global prices that have already dropped 33 per cent from a record high in April. Thailand and Vietnam, the world's biggest exporters of rice, have raised forecasts this year as farmers planted more in response to higher prices. "We'll wait until October before we take any decision on relaxing exports," said Mr 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 restricted exports of rice, wheat, corn and cooking oil to tame inflation that has climbed to a 16-year high. Mr Singh faces elections in less than a year. Higher food costs can mar poll prospects in a country where more than half the population survives on less than US$2 (Dh7.35) a day. India banned rice exports in April to rein in prices after demand for the grain in government welfare programs had doubled in five years. China, Vietnam and Egypt also curbed sales to boost local supplies, threatening supplies of food and security in nations from the Philippines to Nigeria.

"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 on 28.2 million hectares as of Aug 18 compared with 25.6 million hectares a year earlier as precipitation during the monsoon season, which lasts from June to September and accounts for four-fifths of the country's rainfall, remained high for a second week.

The monsoon was 36 per cent above average in the week that ended Aug 13, according to the weather office. Rains were two per cent above average between June 1 and Aug 13, according to the agency. The government plans to create a strategic reserve of two million tons from this year's rice crop as the South Asian country takes measures to safeguard supplies. It already has an emergency reserve of 3 million tons of wheat from this year's record harvest.

Rice prices climbed to a record $25.07 per 100 pounds at the commodities exchange in Chicago on April 24. Escalating food prices also caused suffering for UAE residents. Commodity prices crept up after record high costs for rice and concerns about a potential slump in world wheat crops. Small-and medium-sized supermarkets reported that supplies were squeezed for non-basmati rice following a decision by India to ban exports in March.

"We had to raise prices slightly because India stopped supplying us," said Khaled Zanul Abid, the general manager of Talal Supermarkets in Jebel Ali. The price of various items in his supermarket has increased by 50 to 55 per cent in recent months. Worries about commodity prices continued to mount after Thai rice surged to a record $1,000 per ton on global markets in April, three times its level in January. Thailand is the world's top exporter of the grain, responsible for nearly a third of the global rice trade.

The Middle East is a significant market for Thai rice with the UAE, Saudi Arabia, Qatar, Yemen and Syria the leading importers of the grain. An estimated $503.7 million of Thai rice was exported to the Middle East in 2006, an increase of $214.9m from the previous year, according to official figures. The UAE imports 80,000 tons of rice annually from countries including India, Pakistan, Thailand, Vietnam and the Philippines. While the UAE is not one of the major world importers of the grain, the high number of residents who eat rice as a staple makes the item a vital commodity.

* With Bloomberg