Why rising fine rice prices are fueling retail inflation in Tamil Nadu
El Niño effect, deficient southwest monsoon, high fertiliser and fuel costs, and labour shortages impact paddy production, leading to low supply, higher prices
Rice is a staple food in Tamil Nadu, with per capita consumption well above the national average. Recently, retail prices for fine and preferred varieties have risen sharply, making the state's food inflation the highest among major states.
Fine (Sanna) rice, the slender, soft-cooking type, most commonly used for home cooking, has moved from roughly ₹50-60 per kg in August to ₹70-90 per kg in many markets, with some retail outlets reporting prices up to ₹90 per kg.
The national retail inflation (Consumer Price Index, or CPI) rose to 5.54 per cent in September from 4.83 per cent in August, according to the National Statistics Office (NSO). Food inflation climbed to 7.74 per cent from 5.97 per cent.
Also read: Retail inflation rises to 5.54 pc in Sept on higher food prices
In Tamil Nadu, the combined rural-urban inflation increased from 5.91 per cent in August to 6.81 per cent in September, the highest among states. Food inflation in the state surged to 10.62 per cent, again the highest among states, with Andhra Pradesh being the only other state in double digits at 10.18 per cent.
Rice prices nationally were about 8.25 per cent higher year-on-year; in Tamil Nadu the rise was around 9.14 per cent.
Fine varieties in short supply
There is no overall shortage of rice in Tamil Nadu. Rice mill owners state that only specific fine (Sanna) varieties are in tighter supply.
Popular types include Akshaya, Amman Sona and RNR. These are not widely grown in the state and are largely sourced from Andhra Pradesh, Telangana and Karnataka.
Dinesh Kumar, president of the Rice Mill Owners Association, said most of the Sanna rice demand is met from neighbouring states. Limited cultivation of these varieties occurs in a few districts such as Ramanathapuram and Theni; the bulk of local paddy is the coarser motta type. (It means that the majority of the locally grown, unharvested rice consists of thick, short, and wide grains, rather than long, slender, or highly refined varieties like Basmati).
Rainfall shortfall, lower production
The southwest monsoon ended with significant rainfall deficits in key source states. India Meteorological Department data showed Andhra Pradesh with a rainfall shortfall of roughly 29 per cent, Telangana 17-18 per cent and Karnataka around 24-30 per cent, contributing to lower paddy production.
K Rajendran, secretary of the Tamil Nadu Rice Mill Owners' Association, said mills that previously received 20-40 tonnes of paddy daily from outside states now receive supplies only two or three days a week. “Production has fallen in the growing areas, so less paddy is coming to Tamil Nadu,” he told The Federal.
Also read: India’s inflation may peak at 6.8 pc in Nov; SBI Research flags broader price pressures
From mills, the Sanna varieties are sold to traders at ₹60-75 per kg and premium Akshaya at about ₹80 per kg (previously a maximum of around ₹60). In Chennai retail, prices have reached up to ₹90 per kg. Trader T Saminathan said Kannada RNR is now priced at ₹75-80, Vella Ponni is rising from about ₹70 to ₹90, and BPT Ponni from ₹60 to ₹70-75.
What has spiked the prices?
Industry reports indicate 26-kg bags of super-fine rice rose by up to ₹230 in recent days (to around ₹1,950), while broader increases of ₹5-15 or more per kg have been recorded over preceding months for several fine varieties. Common/coarse varieties have also risen seasonally, though less sharply.
Factors cited by traders and millers include the higher Minimum Support Price (₹2,750 per quintal for fine paddy and ₹2,600 for common varieties from 1 September), elevated fertiliser and fuel costs, labour shortages, strong urban demand for fine rice in cities such as Chennai, Madurai and Coimbatore, and the seasonal gap before the Samba harvest.
Sanna production push
Most Tamil Nadu farmers, including those in the Cauvery delta, grow coarser motta rice. It yields roughly 25 per cent more per acre and is reliably procured by the government for the public distribution system.
The price premium for Sanna paddy is just about ₹100-200 per quintal, providing limited incentive. Consumers largely prefer not to buy "motta" rice for household cooking; it is mainly supplied through ration shops.
Also read: WPI inflation jumps to 11.39 per cent in September as fuel, food prices rise
Mill owners have suggested that greater government procurement of Sanna varieties, with incentives similar to the ₹5 per kg extra paid in some neighbouring states, and research on short-duration and profitable Sanna types could increase local production over time. If southern supplies remain constrained, northern sources such as Madhya Pradesh or Punjab could be used; the additional transport cost is estimated at only ₹2-3 per kg, though the grain may be slightly less fine.
El Niño impact on Kharif crops
Paddy cultivation across India remains heavily dependent on seasonal rainfall and irrigation, and climate variability has sharply curtailed output this year. Kharif rice sowing area declined from 449.18 lakh hectares to 433.62 lakh hectares – a drop of 3.46 per cent according to the Union Ministry of Agriculture.
The shortfall is linked to El Niño conditions and deficient southwest monsoon rains in key producing regions including Andhra Pradesh, Telangana, Karnataka, Maharashtra and parts of Tamil Nadu. Lower reservoir and river levels forced greater reliance on deep borewells, raising production costs for fertiliser, diesel, pesticides and labour.
The southwest monsoon closed 12.6-13 per cent below the long-term average, with deficient rainfall over about 42 per cent of the country’s area, as per IMD data. While the minimum support price for paddy stands at ₹2,440 per quintal, open-market rates have reached around ₹4,000 per quintal. National rice prices rose 5.59 per cent in the past month and stand 52.4 per cent higher than a year earlier.
Also read: As RBI tightens screws, what it means for your loan, home and food bill
Reduced paddy and rice arrivals from Andhra Pradesh, Telangana, Karnataka and West Bengal into consuming states such as Tamil Nadu have tightened mill stocks, while festival-season demand around Diwali has added further pressure.
Specific bag prices reflect the trend: Deluxe Ponni (26 kg) has moved from about ₹1,400 to ₹1,800; Ponni (26 kg) has increased from ₹1,600 to ₹1,950; idli rice (26 kg) price has risen from ₹900 to ₹1,200; and basmati (30 kg) price has grown from ₹3,300 to ₹3,600.
Post Samba harvest prices
Industry and trade sources expect prices of fine varieties to remain elevated for the next one to two months until new harvest arrivals strengthen in January–February. The Centre has advised states to encourage shifts toward less water-intensive short-duration crops, pulses and millets, and has indicated that open-market sales or export measures could be considered if required to stabilise supplies.
The Tamil Nadu government is examining a plan to procure fine (Sanna) rice from the Food Corporation of India and other states and sell it through cooperative stores at ₹40-50 per kg. A Cooperation and Food Department official said data is being collected on availability and quantities in various states. If at least one lakh tonnes can be secured, steps will be taken to sell the rice at the lower price in cooperative outlets.
Also read: IMF lifts global growth outlook; India to remain fastest-growing major economy at 7%
A price-monitoring committee meeting chaired by the state Minister for Food and Civil Supplies, P Venkataramanan, was held at the Secretariat to review essential commodity prices. The proposal remains under consideration and has not yet been implemented. Ration shops continue to supply coarser rice under the public distribution system.
Supplies of fine rice are expected to improve after the Samba harvest in January, according to industry representatives, though current tight arrivals from neighbouring states have kept prices elevated in the interim.
