Grain Stocks Far Above Buffer as Rice Harvest Falls 6.5%: Two Op-eds Split on Keeping Exports Open

The news

New Delhi. Two opinion pieces take opposite positions on grain exports in a drought year. In The Indian Express, Shweta Saini and Vansh Oberoi of Arcus Policy Research note that on August 24 wheat exports moved from “prohibited” to “free”, after calibrated permissions of 2.5 million metric tonnes (MMT) each in February and April. Production is officially 120.7 MMT, though trade estimates are closer to 110 MMT; procurement reached 35.76 MMT against about 30 MMT last year; and Central Pool wheat stocks stood at nearly 48 MMT on September 1, more than twice the October 1 buffer norm of 20.5 MMT. A buffer norm is the minimum stock the government wants to hold for the public distribution system and emergencies. “But a buffer surplus is not an export surplus,” they write: the crop that must replenish stocks will be sown in the next two months, the monsoon is about 15% below normal, NOAA’s September 14 update keeps El Niño through January–March 2027, and March heat during grain filling cuts yields. They recall 2022: a record estimate of 111.3 MMT in February, export promotion as late as May 12, a ban the next day, and the estimate cut to 106.4 MMT on May 19. Their prescription: a calibrated export window, revisited as information improves. In The Economic Times, Purnadev Jena, economic adviser in the Uttarakhand Chief Minister’s office, writes that industry estimates put 2026-27 rice output at about 144 MT, down 10 MT or 6.5% from last year’s record 154 MT — the steepest fall since the 2009-10 El Niño drought. Paddy sowing was 42.68 million ha on September 11 against 44.38 million ha, with Karnataka, Telangana, Andhra Pradesh and Tamil Nadu accounting for 12.3 lakh of the 17 lakh ha lost. Yet rice stocks, including unmilled paddy, were a record 59.6 MT on September 1, 5.8 times the 10.3 MT buffer for October 1. He opposes an export ban — last year’s 24.5 MT of exports made India about 40% of world rice trade — preferring a published minimum export price if needed, and objects that the Food Corporation of India (FCI) sold 6.35 MT to ethanol distilleries between June 2025 and June 2026 at about ₹23 a kg against a cost of about ₹36, an implicit subsidy of roughly ₹9,700 crore “for burning grain”. The syllabus link is GS3 on food security, buffer stocks and agricultural trade.

Static syllabus linkage

1. Buffer norms are set by the Centre for each quarter, and the FCI holds the stock. The Food Corporation of India, set up under the Food Corporations Act, 1964, procures, stores and moves foodgrains for the Central Pool along with State agencies. The Centre fixes buffer stocking norms separately for the first day of each quarter — April 1, July 1, October 1 and January 1 — because stocks are highest after harvests and lowest before them. The norms cover operational stock for the public distribution system and a strategic reserve for shortfalls. Stock far above the norm is costly, since the economic cost of holding grain includes interest, storage and losses, which is why surplus is sold through the Open Market Sale Scheme.
2. The Open Market Sale Scheme is the tool for cooling prices from Central stocks. Under the Open Market Sale Scheme (Domestic), the FCI sells surplus wheat and rice from the Central Pool in the open market, mainly through e-auctions, at a reserve price fixed by the government. Its aims are to cool open-market prices in the lean season and to reduce the carrying cost of excess stocks. Jena’s proposal to sell rice in deficit States at a reserve price that recovers cost is a variant of this scheme. The Centre has also used the same stocks to supply rice to ethanol distilleries under the biofuel programme.
3. Minimum support prices and the NFSA are the two ends of the procurement pipeline. Minimum support prices are announced by the Union government on the recommendation of the Commission for Agricultural Costs and Prices (CACP), an attached office of the Agriculture Ministry, and are approved by the Cabinet Committee on Economic Affairs. Grain procured at MSP feeds the National Food Security Act, 2013, which covers up to 75% of the rural and 50% of the urban population with 5 kg of grain per person per month, and 35 kg per household for Antyodaya Anna Yojana families. Since January 2023 this grain is free under the Pradhan Mantri Garib Kalyan Anna Yojana. Open-ended procurement at MSP in surplus States is the main reason stocks overshoot the buffer.
4. Export bans rest on the Foreign Trade Act and are watched by the WTO. The Foreign Trade (Development and Regulation) Act, 1992 empowers the Central Government to prohibit, restrict or regulate exports and imports, and the Directorate General of Foreign Trade notifies such changes in export policy, such as moving an item from ‘prohibited’ to ‘free’ or fixing a minimum export price. A minimum export price is a floor below which an item cannot be exported, a softer tool than a ban. At the WTO, Article 12 of the Agreement on Agriculture requires a member imposing food export restrictions to consider the food security of importing members and to notify them. Separately, the Bali Ministerial Conference of 2013 adopted an interim ‘peace clause’ protecting developing countries’ public stockholding programmes for food security from legal challenge even if they breach subsidy limits.

Why UPSC loves this

1. GS3 names buffer stocks and food security in so many words. The syllabus lists ‘public distribution system — objectives, functioning, limitations, revamping; issues of buffer stocks and food security’. Mains has asked whether India’s food stocks are excessive, and about the costs of procurement and the case for direct income support. These two op-eds together supply both sides of that answer with numbers.
2. Prelims tests the institutions, not the tonnage. UPSC has asked about the CACP, the crops covered by MSP, the coverage of the NFSA and the WTO’s Agreement on Agriculture boxes. The Open Market Sale Scheme, the quarterly nature of buffer norms and the peace clause are natural statement questions.
3. Trade reliability is a new angle in agricultural questions. The wheat ban of May 2022 and the rice curbs that followed drew criticism from importing countries. Questions on India’s role in global food security, including in G20 and WTO debates, can use the idea that abrupt bans erode India’s reputation as a supplier.

Analysis

1. The two op-eds disagree less than their headlines suggest. Saini and Oberoi do not ask for a ban; they ask for a calibrated window that can be widened later. Jena does not ask for unlimited exports; he accepts a published minimum export price if domestic prices heat up. Both reject the pattern of 2022 and 2023, when exports were promoted one day and banned the next. The real difference is the crop: Jena writes about rice, where stocks of 59.6 MT dwarf a 10 MT harvest loss, while Saini and Oberoi write about wheat, where the next crop has not been sown and stocks are only about twice the buffer. Read together, they suggest freer rice exports and more cautious wheat exports this year.
2. Huge stocks and rising prices at the same time mean the problem is distribution, not supply. Rice prices are already 7-8% above a year ago even as stocks are at a record. That paradox shows grain sitting in FCI godowns does not reach consumers unless it is released. Jena’s proposal to trigger open-market sales when retail rice inflation crosses a threshold such as 8% turns a discretionary decision into a rule that traders can anticipate. The counter-argument is that pre-committed rules can be gamed and that sales below cost weaken FCI finances, which is why he insists on a reserve price that recovers cost.
3. Selling rice to distillers at 40% below cost is a hidden subsidy that deserves a Budget line. If the FCI’s rice costs about ₹36 a kg and it sold 6.35 MT to distilleries at about ₹23, the loss of roughly ₹9,700 crore sits in the food subsidy rather than in energy policy, where it belongs. The ethanol blending programme may be worth supporting, but its costs should be visible. Using grain for fuel in a drought year also invites the food-versus-fuel objection. Jena’s proposal to freeze diversion at the 7.2 MT already allocated is a modest correction; the larger lesson is that surplus stock management needs transparent pricing, whatever the buyer.
4. The stock overhang is the product of procurement policy, and the drought is an opportunity to fix it. Stocks at 5.8 times the rice buffer are not a sign of prudence; they reflect open-ended procurement at MSP in a few States, which locks up capital and pushes farmers towards water-intensive paddy. Jena’s long-run agenda — direct income support, right-sized buffers, direct-seeded rice and drought-tolerant varieties, and a shift to pulses, oilseeds and maize — addresses the cause. The political difficulty is that procurement is a guaranteed income for farmers in Punjab and Haryana, and any reform must replace that security rather than simply withdraw it.
5. Credibility in trade policy is an economic asset India keeps spending. Saini and Oberoi warn that opening exports fully and then shutting them abruptly erodes India’s reliability as a supplier. Importers that sign long-term contracts need predictability, and each sudden ban pushes them towards Thailand, Vietnam or the Black Sea. A rule-based approach — a minimum export price or a quota announced in advance with clear triggers — protects domestic consumers without the reputational cost of a ban. The counter-view is that no government can let food prices rise at home in a drought year, so the rules must be credible enough that they are not abandoned at the first price spike.

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