Grain populism: As polls near, states embark on aggressive paddy procurement

Grain populism: As polls near, states embark on aggressive paddy procurement

Chhattisgarh, Bengal and UP emerge frontrunners in extending MSP-plus support to farmers

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The flip side to aggressive procurement by most states — with elections obviously acting as a spur — is a pile-up of inventories in public godowns.

Call it the impact of the ensuing national elections: Governmental procurement of rice, the country’s largest crop by planted area, looks set to surpass 40 million tonnes (mt) for the time ever in the current marketing year that runs from October to September. That would work out to more than a third of the total projected production of 115 mt for 2018-19.

According to data compiled by the Union Ministry of Consumer Affairs, Food and Public Distribution, the Food Corporation of India and state government agencies had, as on February 11, already purchased 342.45 lakh tonnes (lt; 10 lt equals one mt) of rice in the ongoing 2018-19 marketing year. With the post-monsoon kharif crop still being marketed in eastern and southern India, and the winter rabi paddy arriving only after April, the overall figure is likely to cross 400 lt, which will be more than the 381-382 lt levels of the last two years.

“Our own target this time is 375 lt, which will probably be exceeded. If the additional quantities bought by states that have announced bonuses (over and above the Centre’s minimum support price or MSP) or are implementing their own direct purchase programmes, we could end up with 400 lt-plus,” said a top ministry official.

The state-wise data is what’s, in fact, quite revealing.

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Chhattisgarh has, in the current marketing season from November 1 to January 31, procured 80.37 lt of paddy, which, at 67 per cent recovery, translates into 53.85 lt of milled rice. That would be higher than the previous record of 48.04 lt for the state achieved in 2012-13 (see table). Moreover, the new Congress-led government has declared a bonus of Rs 750 on top of the Centre’s MSP of Rs 1,750 per quintal for common paddy.

“We have already paid Rs 2,500/quintal for the paddy that was bought after December 22. For the crop that was sold prior to this date when the higher rate took effect, the payment of the Rs 750 price difference will be fully made by the end of this month. In all, 15.71 lakh farmers will benefit,” Richa Sharma, Principal Secretary (Food and Civil Supplies) in the Chhattisgarh government, told The Indian Express. The Rs 750 per quintal bonus — which was part of the Congress party’s manifesto for the November 2018 State Assembly elections — on 80.37 lt of paddy will cost the Chhattisgarh government about Rs 6,028 crore.

The other state, also Opposition-ruled, expected to register all-time-high procurement is West Bengal. “We have set a target of 52 lt of paddy (34.84 lt in terms of rice), of which about 30 lt will be completed by February-end and 40 lt by April when the kharif marketing season gets over. The rest will largely comprise the boro (rabi) paddy that will be procured during May-August,” informed Manoj Kumar Agarwal, Principal Secretary (Food and Supplies).

West Bengal is further extending a Rs 20/quintal bonus over the Centre’s MSP to farmers bringing their paddy to the mandis for sale to government agencies. The Trinamool Congress-led government has also fixed a limit of 90 quintals per farmer to enable the maximum numbers to avail of the MSP, which is roughly Rs 250-300/quintal more than the prevailing open market price. “The 52 lt isn’t a rigid target. We will not say no if farmers continue to offer their paddy,” added Agarwal.

The BJP-ruled Uttar Pradesh (UP) is the other state that’s well on course to achieving 50 lt paddy procurement this year. “50 lt is only a tentative target. We undertook procurement operations in West UP from October 1 to January 31. In East UP, procurement began on November 1 and will continue till February 28. We have already done 46 lt so far and are paying farmers an extra Rs 20/quintal (above the Centre’s MSP) if they bring grain to our purchase centres after proper cleaning and drying,” stated Nivedita Shukla Verma, Principal Secretary (Department of Food and Logistics).

UP has, in the past, managed to procure 40.08 lt of rice in 2008-09 and 33.55 lt in 2011-12. These would be on par or more than the 33.5 lt — the rice equivalent of 50 lt of paddy — targeted for 2018-19. However, the fact that it comes just after the 52.94 lt procurement of last year’s wheat crop — more than the previous best of 50.63 lt for the 2012-13 rabi marketing season — is likely to be projected as a major achievement of the Yogi Adityanath administration, which has faced flak on other agriculture-related issues such as non-payment of dues to sugarcane growers and farmers finding it increasingly difficult to cope up with the menace of stray cattle.

The flip side to aggressive procurement by most states — with elections obviously acting as a spur — is a pile-up of inventories in public godowns. Total rice stocks (inclusive of un-milled paddy) in the central pool as of January 1, at 366.60 lt, were almost five times the required minimum operational-cum-strategic reserve of 76.10 lt for this date. Together with wheat stocks of 271.21 lt, it adds up to 637.81 lt, the highest at this time since the 666.04 lt touched on January 1, 2013.