Paddy purchases by Govt drops 13%, as farmers hold on to stocks

By Sandip Das

Paddy procurement under the minimum support price (MSP) scheme declined 13% on year to 36.54 million tonne (MT) so far in the current season, with farmers in Chhattisgarh and Telangana holding on to stocks in anticipation of receiving bonus over MSP.

On the hustings, the BJP which returned to power in Chattisgarh after recent assembly elections promised a procurement price of Rs 3100/quintal for paddy, including bonus, against MSP of Rs 2,183. The Congress which won in Telangana also hinted at bonus over paddy MSP.

Sources said the slowdown in procurement is mainly due to sharp fall in purchases by the Food Corporation of India (FCI) and state governent agencies from farmers in Chhattisgarh and Telangana although purchases in Punjab and Haryana have been robust.

In Punjab and Haryana, where the procurement of paddy has been completed, total purchase from farmers have been 18.54 MT and 5.88 MT respectively which is higher than previous year.

However in Chhattisgarh, purchase by the agencies have dropped sharply by 40% to 3.18 MT so far against 5.29 MT reported a year ago.

“The farmers are awaiting purchase of grains by agencies at higher prices as the new government has just been formed,” an official from Chhattisgarh said. The state in the 2022-23 season (October-September) procured 8.75 MT of paddy, which was 12% of the government’s total purchase of 73.5 MT across major grain producing states.

In Telangana, only 3.56 MT of paddy has been purchased from farmers so far, a decline of 26% on year. The farmers are anticipating additional bonus on MSP from the new government thus keeping their stocks, an official said.

However the food ministry official said that the gap in paddy purchase this year will be bridged in coming months as kharif procurement continues till May next year.

Rice procurement is ongoing in several other states, including Odisha, Bihar, Andhra Pradesh and West Bengal, a significant contributor to central pool stocks,

This year’s grain procurement is closely monitored due to uneven monsoon rainfall which may impact the rice output in 2023-24 crop year (July-June) despite higher area under paddy cultivation.

In August, the government had set a 52.1 MT rice (77.4 MT paddy) purchase target for the kharif season, compared to 49.5 MT procured in the previous season.

During the 2022-23 season, FCI and state agencies procured over 56.94 MT of rice in both kharif and rabi seasons. Kharif rice production in India is estimated at 106.31 MT, a 3.7% decline due to uneven monsoon distribution.

Currently, FCI holds 18.24 MT of rice stocks, excluding 29 MT receivable from millers. The rice stock is against the buffer of 7.61 MT for January 1.

FCI annually supplies 38 MT of rice for supply to the beneficiaries under the Pradhan Mantri Garib Kalyan Anna Yojana.

The rice procured from grain surplus states is also used for keeping a buffer stock with FCI.

After paddy is procured from the farmers by FCI and state agencies, it is handed over to millers for conversion into rice. Paddy to rice conversion ratio is 67%.

This article has been republished from The Financial Express.

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