India’s rice production faces biggest drop in two decades

India's rice production is expected to decline for the first time in a decade and by the largest amount in nearly two decades, according to industry officials. Below-normal rainfall during the maturation period is expected to reduce yields, Reuters reported. The world's biggest rice-producing and exporting country will see local prices rise and exports become more expensive at a time when prices are already increasing in other exporting countries like Thailand and Vietnam.

Despite lower output, India is expected to maintain record levels of exports due to massive inventories from previous years. B.V. Krishna Rao, president of the Rice Exporters Association, estimates production could decline by around 10 million metric tons, a nearly 6.5% drop from last year's record 154 million tons. The decline would be the biggest since 2009/10, when an El Niño-induced drought led to a production decrease.

The prolonged dry spell in recent weeks has significantly reduced yield potential in southern and eastern states, with rainfall 15% below normal since the monsoon season began on June 1. Some rice-growing states have received as little as 42% of the normal rainfall. The summer-sown crop area, which makes up more than 80% of total production, is 4% lower than a year earlier, while the winter-sown crop area is also expected to decline due to reduced water levels in reservoirs.

Local rice prices have already begun to rise, pushing export prices to their highest level in over a year. State reserves of rice, including unmilled paddy, reached a record 59.6 million tons as of September 1, surpassing the government's target of 10.3 million tons by October 1.