The price of rice is affected by the following factors impacting its demand and supply in market:
● Minimum Support Price – Rice is one of the most procured crops under the MSP regime. The MSP regime sets a floor price for rice in markets and if price falls below this farmers can then sell to the government.It also Consititution farmers to produce more rice thereby increasing demand.
● Government Trading – Government does trading in cereals like rice, wheat by conducting Open Market Sale Scheme (OMSS). This enhances the supply in market and thereby impacts the price.
● Government Stockpiling – Government maintains a buffer stock of food grains for emergency situations. This creates more demand for rice in the markets thereby increasing its price.
Consumer Subsidies – Government subsidies rice under the national food security act by providing rice at subsidized prices to the poorer sections of the society. This leads lesser price for consumers.