1. Local grain buys win-win for farmers, FCI

Local grain buys win-win for farmers, FCI

Farmers in most states will get to benefit from the Centre’s minimum support price (MSP) for rice by October as almost all producing states will begin local grain procurement by then...

By: | Updated: May 27, 2016 8:51 AM
The food ministry, sources said, has urged all major procuring states to adopt DCP system of procurement from the next kharif season (2016-17) and the 2017-18 rabi season. (Reuters) The food ministry, sources said, has urged all major procuring states to adopt DCP system of procurement from the next kharif season (2016-17) and the 2017-18 rabi season. (Reuters)

Farmers in most states will get to benefit from the Centre’s minimum support price (MSP) for rice by October as almost all producing states will begin local grain procurement by then, sources said, reports Sandip Das in New Delhi.

Despite the policy emphasis on MSP as a tool to boost rural income and avoid distress sales by farmers, the facility has been largely restricted to states like Punjab and Haryana, which together account for more than a third of the rice and almost half the wheat procured.

Of course, in recent years many other states have added to the procurement pool by using local agencies under the so-called decentralised procurement (DCP) mechanism launched in 2007-08, but pan-India MSP coverage was still a way off.

According to Union food ministry data, in the last five years DCP states, especially Andhra Pradesh, Telangana, Chhattisgarh, Odisha, Madhya Pradesh and West Bengal, have contributed significantly to the country’s total rice procurement. These six states, for instance, procured more than 13 million tonnes (mt) of rice in the 2015-16 marketing season, while the countrywide purchase stood at 32 mt.

Food Corporation of India (FCI) as the central procurement agency procures rice and wheat largely from Punjab and Haryana, stores these in warehouses and distributes to states for targeted public distribution system (TPDS) operations. The DCP states, on the other hand, procures rice and wheat from farmers within their borders and after meeting the local TPDS requirement, offers the surplus, if any, to FCI for delivery in grain-deficit regions. “The DCP states help us in saving cost of transportation of rice from surplus to deficit states to a large extent,” an FCI official said.

The food ministry, sources said, has urged all major procuring states to adopt DCP system of procurement from the next kharif season (2016-17) and the 2017-18 rabi season. Under DCP, the state government concerned avails of food credit through a consortium of banks designated by the Reserve Bank of India; state procurement agencies pay the MSPs to farmers and get reimbursed by FCI along with all costs.

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