Since its formation as a state in 2014, Telangana's rice production has surged, turning from a success story into a mounting surplus challenge that strains storage and fiscal resources, according to a recent policy paper from Prof. Jayashankar Telangana Agricultural University (PJTAU). Over the past decade, rice output has nearly tripled, from about 66 lakh tonnes in 2013-14 to 1.70 crore tonnes in 2024-25, making the state one of the top-3 rice-producing regions in India and contributing nearly 12 per cent to national output.
Production Surge and Irrigation Expansion
The paddy area expanded from 19.95 lakh hectares to 47 lakh ha over the period, entirely irrigated thanks to new projects and favourable monsoon rains that increased water availability. Yield growth, however, has remained stagnant. Barring cotton, which competes with paddy area in the kharif season, most other crops barely cross the two-digit percentage acreage area, leading to monocropping concerns. The Centre for Sustainable Agriculture and Development Studies (C-SAS) at PJTAU released a set of recommendations titled Managing Telangana's Rice Surplus: Opportunities for Export Earnings, Sustainability and Crop Diversification, prepared by Samarendu Mohanty (Professor of Practice & Founding Director, C-SAS) and Aldas Janaiah (Vice-Chancellor of PJTAU).
Procurement and Surplus Levels
In 2024-25, the state procured 1.28 crore tonnes of paddy. After contributing 1.08 crore tonnes to the Central pool and allocating some for local schemes, the state was left with more than 15 lakh tonnes. In 2025-26, kharif-season procurement increased to a record 71.8 lakh tonnes, up from 70.8 lakh tonnes the previous kharif. With a central allotment of 53 lakh tonnes, the state will be left with about 20 lakh tonnes. The authors noted that "going forward, the surplus situation is likely to worsen during Rabi 2025-26 with an expected increase in rice production under current policy settings." They highlighted a "Catch-22 situation" because India's Minimum Support Price (MSP) for rice is generally higher than global prices, meaning the state incurs losses when exporting. Global rice prices have fallen by nearly 50% over the past year but are expected to stabilise and may rise depending on monsoon conditions in other rice-producing countries.
Policy Recommendations and Outlook
The policy paper calls for procurement rationalisation to prevent recurring overstocking and the development of an export ecosystem to enhance market access and competitiveness. It also urges the government to consider offering an incentive-based crop diversification programme. Holding stocks leads to losses over time due to storage costs, quality deterioration, bank interest, and price risk; disposing of surplus rice minimises fiscal losses and frees up short-term storage capacity. For commodity traders and analysts, the key takeaway is that Telangana's persistent surplus — now exceeding 20 lakh tonnes — will continue to weigh on domestic and possibly export rice prices, especially if the state accelerates disposal. The recommended shift towards export orientation could add downward pressure on global rice markets, while the call for crop diversification may gradually reduce paddy acreage, altering India's long-term rice supply dynamics. Upcoming monsoon forecasts and MSP adjustments will be critical indicators to watch.
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