India: Parboiled rice glut deepens in Odisha amid FCI’s reluctance, rising MSP

• FCI declines to lift surplus as key deficit states prefer raw rice
• Shift to raw rice seen as crucial to balance supply, demand

Odisha is staring at a rapidly escalating rice procurement crisis as the state accumulates an unmanageable surplus of parboiled rice (Ushuna), which the Food Corporation of India (FCI) has been reluctant to lift due to weak offtake in consuming markets. The imbalance is widening after a sharp hike in the minimum support price (MSP) triggered aggressive paddy cultivation, expanding production beyond the state’s handling capacity.

Surplus stock piles up as procurement surges

The state government procured 92.64 lakh metric tonnes (LMT) of paddy in the current kharif cycle, generating 62.62 LMT of milled rice, the majority of which is parboiled. With FCI resisting procurement on the grounds that key deficit states prefer raw rice (Arua), Odisha is now left with nearly 1.3 LMT of unlifted inventory after meeting its public distribution system (PDS) obligations.

The backlog is straining warehouse capacity ahead of the next marketing season. To temporarily ease pressure, the government has approved the distribution of an additional 5 kg of rice to PDS beneficiaries in 19 districts. A proposed auction plan remains stalled, as officials have yet to finalise a minimum reserve price.

MSP hike accelerates supply risks

The surplus problem is set to intensify after the state fulfilled an election commitment, raising the paddy procurement price by INR 800/quintal to INR 3,100/quintal. The higher MSP has driven farmers to maximise acreage, signalling a larger incoming harvest and potentially higher production of parboiled rice. Officials warn that without a structural market realignment, the state may face a storage and disposal crisis.

Raw rice demand exposes structural mismatch

Despite its surplus, Odisha requires nearly 75 LMT of rice annually for domestic consumption. Raw rice accounts for significant consumer preference, prompting the state to distribute around 4.5 lakh quintals under PDS and import truckloads of raw rice daily from Andhra Pradesh, Chhattisgarh, and West Bengal to bridge the gap.

Industry experts and government officials argue that realigning milling operations towards raw rice, coupled with policy directives to millers, could alleviate both the surplus of parboiled rice and the persistent shortage of raw rice. They emphasise that the state must urgently pivot its procurement and production strategy to match consumption patterns and stabilise market operations.