Bihar farmers sell rice below MSP on storage, infra woes

Written by Sandip Das | New Delhi | Updated: Mar 8 2013, 09:07am hrs
A near-absence of marketing infrastructure and grossly inadequate foodgrain-storage capacity have forced many farmers in Bihar to sell rice below the minimum support price (MSP) offered by the central procuring agency the Food Corporation of India (FCI).

While Bihar produuced close to 7 million tonne rice in 2011-12, FCI has a storage capacity of only 7 lakh tonne, which also includes the corporation's hired capacities from the state warehousing corporation and Central Warehousing Corporation (CWC).

A food ministry official told FE that virtually no work has started under the Private Entrepreneur Guarantee (PEG) scheme, which aims to build capacity through private sector investments. This is despite the fact that the tendering process was completed many months ago.

A lack of rice-milling units in the state is also not helping farmers' cause. Bihar had abolished agriculture produce marketing committees (APMC) a few years back.

Thanks to inadequate storage capacity and the absence of mandis, a large number of farmers in Bihar are being forced to sell rice below the MSP, a food ministry official said. Especially those farmers living in districts close to the Uttar Pradesh border have been selling paddy at least 30% below this year's MSP of R1,250 per quintal. The main reason for this is that UP has greater milling capacity.

Sources said that under PEG in 2010-11, close to 3 lakh tonne of foodgrain capacity was to be created in Bihar. Of this, the tendering process has been completed for 90,000 tonne.

Actual work has not started yet because of various issues concerning land acquisition and lack of private sector initiatives, a senior state government official said.

We have asked the central government to support us financially in creation of adequate storage capacities so that farmers are not forced to sell their produce below MSP, Shyam Rajak, minister for food and consumer protection, said, acknowledging the trend.

Ashok Gulati, chairman, Commission for Agricultural Costs and Prices (CACP), said the state government must create adequate marketing infrastructure so that farmers least get the MSP. In the absence of MSP, there would be no incentive for the farmers to produce more, which would lead to a decline in rice production in the state, Gulati said.