Govt Raises Rice Purchase Price By 8 Pct.

India increased the purchase price for common rice to 1,080 rupees ($24.2) per 100 kg for 2011/12 crop year starting in July from 1,000 rupees a year ago, while superior-grade rice will be priced at 1,110 rupees per 100 kg from 1,030 rupees in 2010/11.

India already has bulging stocks of rice after a bumper harvest last year and expectations are for at least the same amount of acreage to be planted in the coming crop year as for 2010/11.

That has already prompted calls for the government to allow exports of non-basmati rice, or common rice.

On Thursday, paddy was quoted at 1,200 rupees per 100 kg at the Delhi spot market, while milled rice sold at 1,600 rupees per 100 kg and corn at 1,250 rupees per 100 kg.

India has around 27.8 million tonnes of rice stocks against a target of 12.2 million tonnes. Concerns are growing that there will not be enough storage to cope with this season's output.

The government also raised its 2011/12 purchase price for soybean to 1,650 rupees per 100 kg from 1,400 rupees, and the support price for corn by 100 rupees to 980 rupees per 100 kg.

At Indore, the hub for soybean, spot prices were quoted at 2,333 rupees per 100 kg.

India is still a net importer of soybean oil and the government wants to encourage production. India allows exports of soymeal and the country is a leading seller of the animal feedstock.

The minimum purchase price is the floor which the government pays to farmers to assure them of an income in case market prices crash.

India's food subsidy bill, including funds spent on the mininum purchase prices for farm commodities, is estimated at 605.7 billion rupees ($13.5 billion) for 2011/12.

The government will have to control spending on food and fuel subsidies if it is to meet its deficit target, the Prime Minister's economic adviser, C. Rangarajan, said on Thursday.

Reining in subsidies is increasingly important for the government as a slowing economy is seen straining its finances.

Source : in.reuters.com