Against the grain: More procurement, less sales

Written by Sandip Das | New Delhi | Updated: May 10 2014, 05:47am hrs
India has ramped up grain procurement in recent years, but its paddy processing capacity hasnt improved. This has led to accumulation of unprocessed food grain with mills and state procurement agencies, reports Sandip Das in New Delhi.

While 26 million tonnes of rice was procured so far this season, nearly a third of the food grain is lying with either mills or procurers, delaying the grains release to the targeted public distribution system (TPDS) (see graphic). The lack of adequate milling capacity is evident in states such as Chhattisgarh, Madhya Pradesh and Odisha that have achieved major procurement in the past three-four years. Although the rice procurement season officially gets over in September, officials in the Food Corporation of India (FCI) told FE that many states might seek an extension this time due to the delay in milling of paddy procured during the kharif season 2013-14.

Madhya Pradesh, which, for instance, does not have any milling capacity, could not process even the paddy procured in the last Kharif season. The state, which has procured 1.4 million tonnes of grain equivalent of rice this season has now been asked to get it processed in the neighbouring Maharashta. Paddy milling capacities have to be revamped if paddy procurement needs to sustained in the long run, especially in states including Madhya Pradesh, Chhattisgarh, Orissa and Bihar that have started contributing to the central government pool in the last couple of years, a food ministry official said.

The government agencies procure the rice for the central pool and distribute through TPDS in two ways: custom-milled rice (CMR) and levy rice. Under the CMR, the government purchases paddy from farmers and then allocates the food grain to mills for processing for a fixed charge and buys them back. In the case of levy rice, the millers need to give specified amount of rice to the government agencies directly.