Procurement of Foodgrains For PDS

The Government of India extends Minimum Support Price (MSP) for wheat, paddy and coarse-grains to the farmers by declaring MSP for these crops in advance in order to give price signal to farmers before beginning of a crop season. The MSP of wheat and paddy has been constantly increased in the last few years to make it remunerative for farmers. Simultaneously, various measures have also been taken to enhance production and productivity of foodgrains. The procurement of foodgrains is open ended and government agencies purchase all the quantities offered by the farmers at MSP.

In order to meet enhanced requirement of foodgrains under the proposed National Food Security Act, there is a requirement of increasing production and procurement of foodgrains in non-traditional procurement areas of the country, particularly in the eastern States.

Implementation of the proposed Food Security Act would also mean raising the annual procurement level to about 65 million tonnes. Majority of this increase will have to come from the non-traditional procuring States.

Production and procurement in the major procuring States viz. Punjab, Haryana, Andhra Pradesh and western UP has already reached a saturation stage as most of the marketable surplus of foodgrains is being already procured in these States. To meet the additional requirement of foodgrains, procurement will have to be increased from the emerging procuring States. Of the newly emerging procurement States, Chhattisgarh has emerged as a large contributor of rice while Madhya Pradesh and Odisha are also giving large surplus of foodgrains to the Central Pool. Efforts are required to increase productivity / yield of rice and wheat in deficit States, especially in eastern States coupled with increase in the usage of fertilizers / irrigation facilities to improve marketable surplus.

A special scheme namely “Bringing Green Revolution to Eastern India” was launched by the Ministry of Agriculture to enhance rice production and productivity in eastern parts of the country. To enhance procurement, the non-traditional procuring states need to strengthen their procurement machinery by creating suitable institutional mechanism and by adopting the Decentralized Procurement (DCP) system and by leveraging Food Credit facilities offered by Reserve Bank of India and the consortium of Banks. These States also need to step up rice milling facilities to encourage procurement.

Two critical areas for increasing and stabilizing procurement would be development of State agencies capable of handling procurement operations and increasing milling capacity for rice particularly in Assam, Jharkhand, Bihar, West Bengal and Eastern UP. There is also a need for increased involvement of Co-operatives and Self-help groups for procurement operations.

Decentralized Procurement (DCP) system should be adopted by the State Governments in Assam, Bihar, Jharkhand, Andhra Pradesh and Rajasthan. Proposals have already been given to these States to adopt to DCP system. These States need to respond earlier.

Availability of adequate storage capacity is a pre-requisite for enhancing procurement and improving PDS distribution. Apart from new storage capacities being created under PEG by the Central Government, States should also endeavour to create intermediate storage capacities for their own use by taking advantage of funding available under RIDF from NABARD and under Rural Godown Scheme. Under the Rural Godown Scheme, subsidy norms have recently been relaxed. State agencies / cooperatives should take advantage of this to build their own storage capacities.