Farmers cultivating high-grade paddy in India are now receiving premiums exceeding ₹1,000 per quintal above the government’s minimum support price, according to The Hindu BusinessLine. The publication reported that rates for these premium varieties have reached between ₹3,600 and ₹3,700 per quintal, a level trade analysts describe as unprecedented for growers. This price surge is directly linked to deficient monsoon rains caused by El Nino weather, which have reduced rice production in the southern regions of Karnataka, Andhra Pradesh, and Telangana.
The rising costs are beginning to affect consumer prices for popular rice types like Sona Masuri and Kolam. The Hindu BusinessLine noted that output in these areas has been significantly impacted, with non-basmati rice crops in Karnataka delayed by half due to the monsoon deficit. Low reservoir levels have led state authorities to prioritize drinking water, further straining agricultural supply. Consequently, the area under Sona Masuri cultivation in states like Bengal has declined as farmers shift to higher-return varieties like Govind Bhog, creating a unified national market where regional shortages drive price increases elsewhere, including in Bihar and Uttar Pradesh.
Export markets are also experiencing volatility due to the supply constraints. The Hindu BusinessLine reported that millers are now offering price quotes valid for less than a day, compared to the usual two to three days, as prices change hourly. Exporters indicated that the validity of these quotes often depends on the specific relationships between millers, traders, and brokers. While some market participants describe the current environment as a buyers' market, the rapid fluctuation in rates has created uncertainty for international buyers.
Despite the premium prices, the overall kharif rice production is projected to fall by at least 10 million tonnes compared to the 123.93 million tonnes harvested in the previous year. The Hindu BusinessLine cited a drop in paddy coverage by at least four percent to 426.81 lakh hectares due to the deficit monsoon. However, the Food Corporation of India holds a record stockpile of 39.05 million tonnes of rice as of September 1, providing a buffer for emergency and welfare schemes. Analysts suggest that while the current price premium offers a temporary boost to farm income, the government must carefully plan market interventions to balance rural growth with consumer affordability.