Rice millers and exporters have urged the government to modify the current levy system where a major portion of paddy procured by private traders from farmers had to be compulsorily given to the center’s pool as stocks in government run warehouses are over flowing with paddy (de-husked rice) .

As per the current levy system, around 50-100% of paddy procured by private traders from farmers had to be compulsorily set aside for FCI or state procurement agencies in consultation with the government as contribution to the central pool.

?With huge stocks of paddy with the government, the time has come to open up the market for the private trade which would help in increasing supplies in the market,? Vijay Setia, president, All India Rice Exporters Association (AIREA) told FE.

He has asked Centre to make levy system optional rather mandatory so that enough stocks are available in the open market. The kharif paddy procurement season is expected to start from January 2011. ?As paddy supplies are expected to be bountiful, leading to a rise in availability of levy rice, the government should think of scrapping the compulsory levy system and making it obligatory, otherwise more grains would rot in government warehouses and payments to millers and farmers too would mount to unmanageable limits,? a rice miller from Punjab warned.

According to FCI official, more than 31.47 million tonne of rice and 22.52 million tonne of wheat was lifted from farmers during 2009-10 kharif marketing season and 2010-11 rabi marketing season respectively. ?This year also due to good monsoon, it is expected that there will be a record production and procurement of wheat and rice,? a FCI official had recently said.

Meanwhile, Setia has said that with such huge procurement and excess stocks, government’ agencies are unwilling to buy consignments in many key paddy growing states due to over flowing godowns.

?To continue with the levy system would eventually destroy private markets in key paddy growing states such as Punjab, Haryana, Rajasthan, West Bengal and Uttar Pradesh,? he added.

Food ministry official acknowledge the levy system was introduced by the Centre in consultation with the states to curb food shortages.

Many states have over the years have introduced various rates for levy rice. For example, Andhra Pradesh, Orissa, Punjab and Rajasthan have fixed paddy levy of 75% for millers and traders, other states such as Chhattisgarh, Uttar Pradesh and West Bengal have levy rate of 50%, 60% and 70%, respectively.