Rice Cultivation in India

India's population is expected to be 1.2 billion by 2012. The demand

for rice in India is projected at 128 million tonnes for the year 2012 and
will require a production level of 3,000 kg/ha significantly greater than
the present average yield of 1,930 kg/ha.

Major constraints to rice production that India faces are land, water,
labour and other inputs such as fertilisers, pesticides and insecticides,
and even high quality germplasm, without affecting the already
degraded and stressed agricultural environment. The
problems/constraints in rice production vary from state to state and
area to area.

Some of the major problems in rice cultivation

• About 78% of the farmers are small and marginal in the country and
they are poor in resource
• The problems of flash floods, water logging/ submergence due to poor
drainage are very common in East India.
• Continuous use of traditional varieties due to the non-availability of
seeds and farmers lack of awareness about high yielding varieties.
• Low soil fertility due to soil erosion resulting in loss of plant nutrients
and moisture.
• Low and imbalanced use of fertilizers, low use efficiency of applied
fertilizers particularly in the North-Eastern and Eastern States.
• The Eastern region experiences high rainfall and severe flood almost
every year which lead to heavy loss.
• Heavy infestation of weeds and insects/pests.
• Delay in monsoon onset often results in delayed and prolong
transplanting and sub-optimum plant population (Mostly in rainfed
lowlands).
• In the years of scanty or adverse distribution of rainfall, the crop fails
owing to drought etc

Factors that affect Rice Prices are as follows

• Weather: Role of weather in rice production is immense.

Temperature, rainfall and soil moisture are the important parameters
that determine the crop condition. Further, natural calamities can also
affect crops. Markets keep watch of these developments.
• Minimum Support Price: Changes in the minimum support prices
(MSP) by the government

also have immense impact on the price of rice.

 • Government policies: Exchange rates, Fiscal policies, Export
incentives and export promotion also influence price.
• Substitute Product: Availability of substitute products at cheaper
rate may lead to weakness in demand. This situation happens
especially when the main products price tends to become higher.
• Consumption: Rice consumption depends on two factors - population
and income. Lets take for example Asia. Rice is the staple food of Asia.
Low-income groups consume more rice according to the per capita
income increase. But as the income increases, there arrives a point
when the consumption starts to dip. Income growth and reduction in
population result in a low consumption of rice.
• Seasonal cycles: Seasonal cycles are present in rice cultivation. Price
tends to be lower as harvesting progresses and produce starts coming
into the market. At the time of sowing and before harvesting price
tends to rise in view of tight supply situation.
• Demand: Import demands as well as domestic demand.
• Breakthrough in the technology may increase the productivity and
would lead to more supply. This may bring some softness in the price.

Minimum Support Price of Rice in India

Keeping in view the interests of the farmers as also the need for self
reliance, the government is announcing Minimum Support Prices (MSP)
for major crops from year to year. Farmers are free to sell in the open
market or to the Government at the MSP depending on what is more
advantageous to them.

The price support policy of the Govt. is directed at providing to

insurance to farmers against any sharp fall in farm prices. The
minimum price is fixed beyond which the market price cannot fall.

There were substantial increases in the MSPs of rice and wheat after
the mid-nineties. MSP of paddy was increased by Rs 35 per quintal in
1997-98.

Minimum support price of paddy (Rs/quintal):

Super
Year Common % Change Fine Grade A
fine
1994-95 340 9.7 360 380 -
1995-96 360 5.9 375 395 -
1996-97 380 5.6 395 415 -
1997-98 415 9.2 - - 455
1998-99 440 6.0 - - 470
1999-00 490 11.4 - - 520
2000-01 510 4.1 - - 540
2001-02 530 3.9 - - 560
2002-03 530 - - - 560
2003-04 550 3.8 - - 580
2004-05 560 1.8 - - 590