Update on India rice

India, the second-biggest producer of rice and wheat, does not need to import grains because its reserves are adequate to fill production gaps after drought and floods damaged summer-sown crops, a minister said.

“We have enough stocks of rice and wheat,” Junior Food Minister K.V. Thomas told reporters in New Delhi today.

The nation’s rice output is forecast by the government to drop 10 million tons from a record following a drought in first half of the year and floods in paddy-growing areas in the south earlier this month. Rice reached the highest level since January today after the Philippines, the biggest importer, said it may arrange a second tender by yearend to purchase the cereal after storms cut domestic output.

Rice jumped to a record in April 2008 after the Philippines increased purchases and some exporters, including India, curbed shipments on concern that there may be a global shortage. Corn, wheat, soybeans and palm oil touched all-time highs last year, stoking inflation and sparking unrest from Haiti to Egypt.

“If we start having problems, weather problems, production problems, the price of rice is going to skyrocket over the next decade,” investor Jim Rogers, chairman of Rogers Holdings, said in an Oct. 12 interview. “When it happens, I don’t know,” he said. “Rice is a basic foodstuff for much of the world.”

Rough rice for November delivery gained as much as 2.8 percent to $14.29 per 100 pounds on the Chicago Board of Trade, the highest level since Jan. 13. The futures, which touched a record $25.07 per 100 pounds in April last year, were at $14.26 at 4:50 p.m. Mumbai time.

Net Buyer

India, which last bought wheat abroad in 2007 and became a net buyer of sugar in the crop year ended Sept. 30, has bought a record 55.1 million tons of rice and wheat from crops harvested in the year ended June 30. That’s enough to last more than a year, Farm Minister Sharad Pawar has said.

The government, the biggest buyer of food crops, purchases cereals such as rice and wheat at guaranteed prices from farmers for sale to the poor at subsidized rates.

In August, the price paid to rice growers was raised to 950 rupees ($21) for 100 kilograms (220 pounds), up from 900 rupees, as inadequate rains forced them to lower acreage by 6.3 million hectares. The price of grade-A grain was raised to 980 rupees.

Exports of wheat were halted in February 2007 and overseas sales of non-basmati rice on April 1, 2008.