Rice stocks surge despite brisk open market sales

BY Sandip Das

The government’s central-pool rice stocks continue to surge despite brisk offloading of grain through open market sale, allocation to states, and for ethanol manufacturing and Bharat rice initiative. Open mark sales this year is likely to surpass last fiscal year’s record sale of 4.63 MT.

According to sources, while 4.19 MT of rice from the Food Corporation of India (FCI) stocks have been offloaded in 2025-26 so far at subsidised rates through various initiatives, the current central pool stock is over 53 MT, four times the buffer of 10.25 MT for October 1.

Officials said the current stock with FCI includes over 14 MT of grain yet to be received from millers.

High procurement adds to surplus

High procurement and robust crop output are the reasons for the stocks being high. Annually the FCI and state agencies purchase around 52 MT to 53 MT of rice from farmers under minimum support price (MSP) while the corporation supplies around 36 to 38 MT of rice for the the Pradhan Mantri Garib Kalyan Anna Yojana (PMGKAY) or free ration scheme.

The paddy procurement season for 2025-26 season (October-September) commences from October 1. There has been concern about possible storage crunch when grain procurement for next season starts.

Subsidy and cost pressures

During April 1 – August 25 (2025-26), FCI has supplies 1.97 MT (ethanol), 1.41 MT (states social welfare scheme) 0.72 MT (e-auction) and 0.06 MT (Bharat rice) and Sources said the sale of rice from the government stock will be surpass previous year’s level in FY26 given the robust demand of grain.

In FY25, the FCI had allocated 4.63 MT of rice to the state’s social welfare scheme (1.12 MT), open market sale scheme (1.96 MT) and ethanol manufacturing (2.3 MT). In 2023-24, only 1.54 MT of rice was offloaded through various schemes to bulk buyers.

Under PMGKAY, 810 million people are currently being provided 5 kg each of specified grains per month free of cost. The free ration scheme is being extended till the end of 2028 and it would cost the exchequer Rs 11.8 trillion.

For the government, the economic cost of rice, including MSP, storage, transportation and other costs at the beginning of the current fiscal was estimated at Rs 41.73/kg which may see an increase due to surplus rice stock.

The government has fixed reserve price of rice at Rs 2250/quintal (for ethanol), Rs 2250/quintal (states), Rs 2400/quintal (Bharat rice) and Rs 2800/quintal (for bulk purchase on e-auction) till October 31, 2025

Sources said that if rice stocks are not brought down to a comfortable level, the carrying cost of grain will steadily rise and may lead to a spike in food subsidy expenses. The government has estimated food subsidy at Rs 2.03 lakh crore in FY25

After procurement of paddy by FCI and state government owned agencies from the farmers at minimum support price (MSP), the grain is handed over the millers for conversion to rice. “Actual rice arrivals in the next season would start arriving by December after commencement of procurement from October 1,” an official said.

This article has been republished from The Financial Express.