Pvt paddy purchases fall on high MSP

Written by Commodities Bureau | New Delhi, Nov 17 | Updated: Nov 18 2008, 05:41am hrs
Paddy (de-husked rice) purchases by private millers and dealers have dipped sharply in the new crop season that started in October, because of timely implementation of the stock limit, local targets set by government agencies and a hike in the minimum support price. This has not only raised governments own paddy procurement to around 14.47 million tonne till November 14 from last years 12.09 million, but also ensured that unlike last year, traders do not have any incentive to hoard riceor paddy.

According to official sources, paddy procurement by private agencies in Punjab alone the countrys largest paddy growing province- has dropped by more than 50% this year. Till November 14 2007, private traders bought around 2.25 million tonne of paddy out of a total arrival of 12.47 million tonne. But this year although arrivals till date have risen to 12.95 million tonne, purchases by private traders has dipped to almost 1.1 million tonne across the state.

In Haryana, the second largest paddy producer, the fall till date has been more than 58% . Official data showed that till November 14, around 2.10 million tonne of paddy arrived in the markets, of which private traders procured around 324,322 tonne. Last year during the same time, arrivals were to the tune of 2.52 million tonne and private procurement was of around 776,637 tonne.

In Uttar Pradesh, arrivals and purchases by private traders and dealers were more than last year. Till November 14, around 581,000 tonne of paddy arrived in Uttar Pradesh, while last year it was around 300,035 tonne. While private buying this year was around 340,473 tonne, last year it was around 280,764 tonne.

The situation in Haryana and Uttar Pradesh is slightly different from that of Punjab because farmers are anticipating a further rise in market prices. But the drop in purchases is much more than the fall in arrivals. In Haryana, arrivals are down by just 16% compared to last year, while private purchases are less by over 58%, the official added.

Last year, paddy procurement by government agencies got off to a slow start, prompting concerns that final purchases might not reach the 2007-08 target of more than 27 million tonne. Later, due to a bumper paddy output in the rabi season and a ban on non-basmati rice exports, procurement by state agencies not only reached the target, but have now been estimated to be over 28 million tonne. In August, the central government imposed quantity restrictions on trade of paddy which was earlier limited to rice, wheat, pulses and edible oil. The government also announced a bonus of Rs 50 per quintal on paddy, raised it to Rs 900 per quintal for common varieties, Rs 930 per quintal for grade A variety.