Govt allows private players to procure rice in eastern states

In a bid to increase the outreach of minimum support price (MSP) operations among farmers, the food ministry has decided

to allow private players to purchase rice in some eastern states from the next marketing season, which commences from October 1.

Sources told FE that private firms will be allowed to procure paddy from farmers in Assam, Bihar, eastern

Uttar Pradesh, Jharkhand and West Bengal, where the Food Corporation of India (FCI) does not have a robust procurement mechanism, which often forces farmers to go for distress sale.

As per the new policy, private parties would be engaged in procurement of paddy from farmers in a cluster, identified by the respective state government and they would deliver custom milled rice (CMR) at the FCI or state government-owned agency godowns.

“Private parties would be allowed to procure paddy from farmers in those areas where FCI and state government-owned agencies do not have significant presence,” a food ministry official said.

Sources said the private sector will be allowed in only those clusters where there is possibility of procurement of one lakh tonne of rice equivalent of paddy. Besides, the policy allows the private parties to open as many purchase centres as possible in the allotted cluster, subject to a cluster covering a minimum 500 to 1000 hectare.

“Private parties would be engaged in procurement operations after e-tendering and the parties would be short-listed on the basis of acquisitions cost, including incidentals such as packaging, transportation and storage of grain quoted by agencies,” the official said.

The official added that the purpose of bringing private players into rice procurement operations was to improve efficiency in procurement, transportation, packaging and temporary storage of grain.

“On the delivery of CMR to FCI or state-owned corporations, the private players would be reimbursed the MSP) and statutory charges paid by them upon production of proof of payment, besides the incidentals quoted in the tender document,” an official said.

The policy follows recommendation by the high level committee (HLC) headed by former food minster Shanta Kumar earlier this year. The HLC had suggested that FCI should move on to help those states where farmers suffer from distress sales at prices much below MSP, and which are dominated by small holdings, like eastern Uttar Pradesh, Bihar, West Bengal, Assam, etc.

“This is the belt from where the second green revolution is expected, and where FCI needs to be pro-active, mobilizing state and other agencies to provide benefits of MSP and procurement to a larger number of farmers, especially small and marginal ones,” the panel had stated.

Recently, the food ministry had set a target to procure 30 million tonne of rice during the next kharif marketing season (2015-16) starting from October 1.

Punjab, the biggest contributor to the central pool, would procure 8.2 million tonne while Chhattisgarh would purchase 3.6 million tonne from farmers.

The key contributors to the central pool include Odisha (2.8 million tonne), Uttar Pradesh (2.7 million tonne), Haryana (2.3 million tonne), Andhra Pradesh (2 million tonne) and Telangana (1.8 million tonne).

The government has announced an MSP for common and grade A varieties of paddy at Rs 1,410 and Rs 1,450 per quintal respectively for the 2015-16 season.