MSP paddy purchases drop 20 per cent amid storage crunch
By Sandip Das
A storage crunch caused by surplus rice held in the central pool, especially in Punjab, has adversely impacted the government’s paddy procurement drive this season (2024-25). Procurement season had commenced on October 1.
As on Thursday, the Food Corporation of India and state government agencies have purchased 12.56 MT of paddy at Minimum Support Price (MSP) from farmers mostly in Punjab, Haryana and Tamil Nadu which is 20% less than 15.74 MT of paddy purchased in the same period last season (2023-24).
More than 0.51 million farmers have been paid Rs 20.495 crore as MSP for paddy purchase by agencies, according to official data.
Food minister Prahlad Joshi has stated recently that sufficient storage is being created in Punjab, the biggest contributor to the central pool grain stock where paddy procurement so far has dropped 25% to 7.32 MT during October, compared to 9.74 MT in the same period last season against an arrival of 8.14 MT of grain.
Similarly, grain purchase in Haryana has dropped by 12% to 4.63 MT on year against an arrival of 4.79 MT so far. Agencies have purchased 0.42 MT of paddy in Tamil Nadu, a marginal decline from previous year while MSP operations have commenced in Uttar Pradesh, Uttarakhand and Himachal Pradesh.
“Due to heavy rainfall in September and the resultant higher moisture content in paddy, the harvesting and procurement were delayed,” according to a food ministry note. Target by the agencies is to buy 18.5 MT of paddy in Punjab and 5.97 MT in Haryana respectively in 2024-25 season .
The government has stated that despite the late start to MSP operations, ‘both the states are well on track to achieve the estimates of paddy procurement by stipulated dates – November 30 (Punjab) and November 15 (Haryana),”.
As on Thursday, FCI and agencies hold 29.82 MT of rice stocks, excluding 13.87 MT receivable from millers. The rice stock is against the buffer of 10.25 MT for October 1.
FCI annually supplies 38 MT of rice for supply to the beneficiaries under the Pradhan Mantri Garib Kalyan Anna Yojana.
Officials said while 1.6 MT of storage capacity is available in Punjab, another 6.5 MT of storage capacity will be available in the state with the evacuation of surplus rice to consuming states by March 2025.
State government agencies and FCI are aiming to buy 48.5 MT of rice (88.67 MT of paddy) in the current kharif season (2024-25) which officially commences on October 1 from key grain surplus states against 46.3 MT of grain equivalent (paddy converted in terms of rice) purchased from the farmers 2023-24.
Key contributors to central pool rice stock include – Punjab, Haryana, Madhya Pradesh, Chhattisgarh, Odisha, Andhra Pradesh and Telangana. Kharif season accounts for around 80% of the total rice purchase during this season. Procurment in eastern and southern states would commence in December.
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