India to Buy 30,000 Tons Rice as Drought Cuts Output

India, the world’s second-biggest rice grower, plans to import as much as 30,000 metric tons of the grain after a drought in almost half the nation cut output.

State-owned PEC Ltd. and MMTC Ltd. are seeking 10,000 tons each for delivery during November and December. State Trading Corp. will seek a similar amount, said a government official, who didn’t want to be identified before the bids are called.

India may become a net buyer of rice for the first time in two decades in 2010 and may buy 3 million tons, said Samarendu Mohanty, a senior economist at the International Rice Research Institute, in an interview yesterday. Rice surged to a record last year, sparking food riots from Bangladesh to Haiti, after fears of shortages prompted producers to slow shipments.

Rice for January delivery gained as much as 1.8 percent to $14.675 per 100 pounds on the Chicago Board of Trade today, and traded at $14.645 at 6:35 p.m. Mumbai time. The price surged to a record $25.07 in April 2008.

India and the Philippines are the two “problem countries right now that can tilt the market one way or the other,” said Mohanty. The Philippines, the biggest buyer, lost 1 million tons of the crop from two storms, widening an earlier estimate by 25 percent, and warned today another typhoon may further cut output.

India’s rice production may fall by 16 million tons this year from a record 99.15 million tons in 2008-09 after drought and floods ravaged crops, Press Trust of India cited Finance Minister Pranab Mukherjee on Oct. 23. The forecast exceeds the 10 million ton loss estimated by Farm Minister Sharad Pawar.

Stockpiles

The planned imports come three days after Farm Secretary T. Nanda Kumar said the South Asian nation has no plans to buy the grain overseas because its reserves are adequate.

India, which last bought wheat abroad in 2007 and became a net buyer of sugar in the crop year ended Sept. 30, purchased 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, Minister Pawar has said.

Still, the government yesterday raised the floor price of rice by 50 rupees for 100 kilograms to encourage farmers to sell more of the cereal to state agencies.

The government, the single biggest buyer of food crops in the nation, purchases cereals such as rice and wheat at assured prices from farmers. The grain is sold to the poor at subsidized rates through a chain of fair-price shops.