India's rice production is set to fall this year for the first time in a decade and by the most in nearly 20 years, as below-normal rainfall during the crop's maturation period threatens yields, industry officials told Reuters. In the world's biggest producer and exporter, the drop will lift local prices and make exports dearer at a time when prices in Thailand and Vietnam are already rising.

'We estimate that production could decline by around 10 million metric tons,' said B.V. Krishna Rao, president of the Rice Exporters Association — nearly 6.5% below last year's record 154 million tonnes and the biggest decline since the El Niño drought of 2009/10. The prolonged dry spell has cut yield potential in the southern and eastern states in particular.

Rainfall has been 15% below normal since the monsoon began on 1 June, weather department data show, and as much as 42% short in some rice-growing states. The area under summer-sown rice stood at 42.68 million hectares on 11 September, nearly 4% less than a year earlier; summer crops account for more than 80% of output, and the winter rice area is also likely to shrink because reservoirs hold less water than normal, said Nitin Gupta of trader Olam Agri India.

Local prices have already begun rising on the prospect of lower output, pushing export prices to their highest in more than a year. Farmers growing premium varieties will get better prices in the open market and sell less to the government, Mr Rao said.

Even so, India should be able to keep exporting without restrictions, a New Delhi dealer with a global trading house said: state reserves of rice including unmilled paddy were a record 59.6 million tonnes on 1 September, far above the government's target of 10.3 million tonnes for 1 October.

Source: The Economic Times, citing Reuters