India, the world's leading producer and exporter of rice, is bracing for a significant drop in its rice output this year. Industry officials warn that production could decline by approximately 10 million metric tonnes in 2026/27, a decrease of nearly 6.5% from last year's record 154 million tonnes. This would mark the biggest fall in almost two decades, reminiscent of the 2009/10 season when an El Niño-induced drought severely impacted yields.
The primary cause for this anticipated slump is a substantial rainfall deficit across the country. Since the four-month monsoon season began on June 1, India has received 15% less rainfall than normal. In some key rice-growing regions, this deficit has been as high as 42%, according to data from the weather department. The area under summer-sown rice, which accounts for over 80% of India's total production, stood at 42.68 million hectares as of September 11, nearly 4% lower than the previous year.
El Niño Worsens Outlook for Rice Cultivation
The looming threat of a strengthening El Niño phenomenon further exacerbates the situation. This weather pattern is pushing India towards what could be its driest monsoon season in 17 years, potentially leading to widespread food inflation. The cumulative rainfall for the June-to-September season is running 15% below the long-term average, a wider deficit than the weather office's initial projection of a 10% shortfall.
BV Krishna Rao, President of the Rice Exporters Association, told Reuters, "Yields will be lower due to reduced rainfall. We estimate that production could decline by around 10 million metric tons." The outlook for winter rice crops also appears bleak, with reservoirs holding less water than normal, as noted by Nitin Gupta, Deputy Country Head at Olam Agri India.
Impact on Prices and Exports
The anticipated decline in India's rice production is already influencing market dynamics. Local rice prices have begun to rise on expectations of lower output, pushing export prices to their highest levels in over a year. This trend is compounded by increasing prices from competing exporters like Thailand and Vietnam.
Despite the production challenges, India's substantial rice inventories might offer a cushion against immediate export restrictions. State reserves, including unmilled paddy, reached a record 59.6 million tonnes as of September 1, significantly exceeding the government's target of 10.3 million tonnes by October 1. A New Delhi-based dealer with a global trading house indicated that these large stockpiles could allow India to maintain exports without imposing restrictions. However, lower domestic availability and rising local prices could ultimately make Indian rice exports more expensive on the global market.