Karnataka Rice Prices Rise on Drought Squeeze

Farmers have cut paddy planting by more than four lakh hectares from a normal annual area of about 13 lakh hectares, according to local industry estimates, as severe drought grips the Tungabhadra and Cauvery river basins. With dams running low and drinking water taking priority in some reservoirs, irrigation releases are limited and tail-end farmers are being pushed away from water-intensive paddy.

That shift matters economically because paddy requires 3,500 to 4,000 litres of water for every kilogram produced, making it one of the most exposed crops in a year of weak monsoon rains. In Raichur and Ballari, farmers say they have not even taken up a single crop this season, compared with the usual two harvests in a normal year.

Millers are already paying up. One local miller said paddy purchases have risen to Rs 4,400 per quintal from Rs 3,000 a few months ago, while the selling price of rice has jumped to Rs 7,500 per quintal from Rs 4,600-Rs 5,300 earlier. That squeeze raises the risk of higher consumer prices spreading beyond Karnataka if supplies stay tight.

Ramesh Chandra Lahoti, an advisor to the agricultural produce market committee, said average rice prices have already risen by Rs 25 to Rs 30 per kg and could add another Rs 10 in the next one to six weeks. For investors, the move reinforces how weather-driven crop losses can feed into food inflation, pressure margins for rice traders and millers, and keep attention on grain-sensitive consumer stocks and agri-linked supply chains.

The immediate catalyst is the November harvest window, when the market will get a clearer read on how much output drought has erased. If rainfall and reservoir levels do not improve, Karnataka’s rice shortage could deepen just as broader Asian rice markets remain volatile.