Paddy procurement crisis due to lack of planning

PADDY is a primary foodgrain crop of India and the country is the second largest producer of rice in the world after China. The total rice production in India during 2023-24 was estimated as 137.83 million tonnes (mt) — 113.26 in kharif, 14.6 mt in rabi and 9.97 mt in zaid. In India, the net sown area during kharif 2024 touched 108.73 million hectares (mha), an increase of about two per cent over the last year, but the area under paddy has increased by four per cent to 40.87 mha from 39.36 mha last kharif. The country is also expecting a bumper harvest of rice this year because of higher area and good rainfall across the country.

During the 2023-24 agricultural marketing year, the Central government procured 52.55 mt of rice from over 1 crore farmers at the minimum support price (MSP), spending Rs 1.76 lakh crore. Punjab was the top contributor in the central pool (12.42 mt), followed by Chhattisgarh (8.3 mt). The annual requirement for the Public Distribution System (PDS) under various welfare schemes and the National Food Security Act was estimated as 41 mt for the country.

However, the government banned shipments of raw rice, including 100 per cent broken rice, continued with a levy of 20 per cent on export duty on parboiled rice and fixed a minimum export price (MEP) of $490 per tonne for non-basmati white rice. The MEP was able to curtail some of the exports, but it also curtailed the alleged diversions from the PDS to a large extent.

States like Chhattisgarh and Odisha are buying paddy from the farmers at a price higher than the MSP, but have fixed a cap of procuring only 21 quintals per acre. So, the farmers whose productivity is higher have to sell their surplus in the market at a price lower than the MSP and the traders purchase it. They had been exporting about 3 mt of white rice before the ban was imposed in 2023.

This has created a situation of surplus stocks and problems of procurement for buffer stocks in the current kharif marketing season and a shortage of storage space for the FCI and state procurement agencies.

Consequently, there is a reduction in the rice procurement target during the 2024-25 kharif marketing season. About 48.51 mt is targeted to be procured against a target of 52.13 mt last year.

In Punjab, the total area under paddy during kharif 2024-25 is 3.154 mha. Out of this, about 1.5 mha is under short-duration varieties like PR 126. The expected market arrivals are 18.6 mt of paddy (12.4 mt of rice).

With increasing market arrivals and slow procurement, there is a glut-like situation in mandis. This is aggravated due to poor lifting because of a shortage of storage space in rice mills due to poor movement of rice from the last procurement season to the consuming states. The situation is further complicated by protests by farmers, labourers (for lower payment for produce handling) and commission agents. Rice millers are also protesting for the lower outturn ratio (OTR) of the PR 126 variety and its higher broken percentage (The pieces of rice kernel which are smaller than three-fourths and up to one-half of the average length of the unbroken kernel are termed as broken).

Thus, a situation of chaos has been created in the state, with farmers and commission agents blaming the state and the state passing on the blame to the Centre and vice versa, while the common people are suffering due to blockades.

The emerging situation could have been avoided by the political and executive bureaucracy by taking the requisite steps in time. The issue regarding the movement of grains should have been taken up with the Union government well in advance as the state has faced similar problems earlier too.

The issue of lower OTR and broken percentage of PR 126 also needs to be sorted out as this variety was released in 2016 and has encountered no such problem to date. If the problem is genuine, it should be taken up immediately with the Union Ministry of Food for relaxation of norms for procurement, based on sound scientific analysis.

We faced a similar situation in 2010 when millers protested about more broken percentages and pinhead damage due to the decolouring of grains of the PAU 201 variety. This variety was released for cultivation in 2007 and within two years, it occupied 25 per cent of the total area under rice because of its high yield under average land and environmental conditions. When millers stopped milling, the then Food and Civil Supplies Minister, Punjab, held meetings with Union Agriculture Minister Sharad Pawar and persuaded the Centre to allow a one-time relaxation of 4.75 per cent for damage (instead of 4 per cent) and 28 per cent for broken grain (instead of 25 per cent). About 1.55 mt of rice, a mixed stock of PAU 201 and other varieties, which was lying unmilled, was milled and used for the PDS.

A similar issue was raised by the industry in 1995 regarding the OTR of PUSA 44, which was tested by the CFTRI, Mysore, and 100 per cent samples were found to have OTR of more than 67 per cent.

Another apprehension is that the problem of low OTR might have been created by hybrid rice. Trade and seed companies are promoting seeds of hybrid rice, claiming that these need less water and time to ripen and have better yields. These hybrids have a longer grain and are probably ideal for trade for mixing in basmati, but these generate a large percentage of broken rice during milling. Experts also say that these hybrids become prone to a higher breakage with time, especially if milling is delayed after March 31, when the temperature starts rising.

These hybrids, not approved for FCI procurement, thus, need to be segregated while procuring. The state Department of Agriculture, being the licensing authority for seeds, must verify the claims of producing companies or get these evaluated before allowing their sale.

The crisis of paddy procurement at hand stems from a lack of proper and long-term planning. With all the available logistics, management tools and technical expertise, why do problems persist?

It is essential to adopt a holistic approach to this critical issue and redesign the marketing chain of paddy in consultation with and for better service to various stakeholders. We must establish a dedicated mechanism that empowers stakeholders to make informed decisions on the trade of commodities, logistics and technical matters. By freeing up political energy to focus on development, we can drive significant progress.