Growth Performance and Value Addition of Rice Industry in India: Potential Opportunities and Challenges

Abstract

Rice is an important component of agri-value chain, and a life-line for the livelihood of billion rural Indians. India's rice sector has been transformed significantly with the increase of rice production by 250% and yield by 230% between 1971 and 2015. There is a wide variation in the growth of rice sector across ecosystems as well as states. India became a leading rice exporter in the world with the worth of US $ 9 Billion-an increase in export of basmati rice by four time and non-basmati rice by 3 folds in 2015 over 2005. About 80 to 85% of rice farmers are small and marginal. Nearly 75% of India's rice production is marketable surplus-largely generated by irrigated rice farmers in north and south Indian states as well as by the large farmers in other parts of the country. The marketing system for rice has huge network that purchase paddy from farmers. Nearly 85-90% of total rice production is domestically consumed in the form of cooked and steamed rice. Thus, rice value chain is largely confined to drying at farmers' level and milling and bagging at millers and traders' level. Total value of rice value chain in India is estimated at only US $ 71 Billion, which is only 7.4% of gross agri-value chain. In case of basmati rice, value chain has been developed considerably during the past one decade. However, there is a huge potential to promote rice-based products through modern value chain in view of rising demand for processed and packaged foods, driven by rapid urbanisation, feminisation, diet diversification and increase in incomes of middle class consumers in urban areas. Thus, promotion of rice value addition on large scale will generate huge employment opportunities for youth besides increasing farmers' income. This paper discusses three key issues with empirical evidences, (a) pathways to transformation of rice sector, (b)nature and future of rice farming, and (c) marketing channels and value chain.