India raises local rice paddy purchase price by 5.2% to encourage farmers


By Mayank Bhardwaj and Rajendra Jadhav

NEW DELHI, June 8 (Reuters) - India has raised the price at which it will buy the new-season common rice paddy variety from local farmers by 5.2%, the biggest increase in five years, as New Delhi encourages farmers to boost acreage and output of the staple.

For the common grade of rice paddy, the government has fixed the support or guaranteed price at 2,040 rupees ($26.26) per 100 kg, Information and Broadcasting Minister Anurag Thakur told a news conference after a cabinet meeting chaired by Prime Minister Narendra Modi.

India is the world's biggest exporter of rice, with a market share of more than 40%.

Plentiful monsoon rains and the increase in the support price could help raise rice output in India, also the world's second biggest consumer of the grain.

As a heat wave hit output, India banned wheat exports on May 14.

The surprise decision to ban wheat exports had raised doubts about some curbs on overseas sales of rice as well.

Piyush Goyal, the Minister for Commerce and Industry and some government and trade officials said India does not plan to curb rice exports.

The monsoon will play an important role in determining this year's rice harvests, and plentiful rains will help New Delhi maintain its preeminent position in the global rice trade.

As local rice paddy prices are still ruling near last year's 1,940 rupees per 100 kg, the increase in the support price would force the government to shell out more on buying the grain from farmers, said a New Delhi-based dealer with a global trading house.

India also raised the cotton purchase price by 6.2% to 6,080 rupees per 100 kg, the soybean price by 8.9% to 4,300 rupees per 100 kg, and the corn buying rate by 4.9% to 1,962 rupees per 100 kg.

($1 = 77.68 rupees)

(Reporting by Mayank Bhardwaj and Rajendra Jadhav, Editing by Louise Heavens)

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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