Punjab stares at storage crisis ahead of paddy procurement

As the state government gears up to procure 185 lakh metric tonnes (LMT) of paddy worth Rs 48,380 crore starting from October 1, concerns regarding storage space are mounting. The procurement will yield approximately 123 LMT of rice. However, with granaries already overflowing with previous years’ stocks of rice and wheat, finding storage for the new produce poses a significant challenge.

Two days ago, a high-level meeting was held in Delhi to address this issue. The meeting was attended by officials from the Food Corporation of India (FCI), the Department of Food and Public Distribution, the Punjab Government and representatives of rice millers’ associations. Discussions focused on moving previous years’ stocks of rice to other recipient states to free up storage space for the upcoming procurement.

B. Srinivasan, General Manager of the Punjab Region of FCI, stated that the Union Government has committed to moving 30 LMT of rice out of Punjab’s godowns by the end of November. This will create space for the rice deliveries that will begin from the mills in December. The FCI also plans to move 13-15 LMT of rice each month from December to June 2025 to states where it is needed, thereby ensuring that there is no storage bottleneck.

In addition, the FCI is accelerating the transfer of 40 LMT of wheat currently stored in Punjab’s godowns to other states to make room for the new rice. The state government is also considering leasing an additional 27 lakh tonnes of storage space to accommodate the surplus grains.

Despite these measures, there are concerns among rice millers about the government’s plans. Bharat Bhushan Binta, president of the Punjab Rice Industry Association, expressed doubts about the effectiveness of leasing new warehouses. He pointed out that many rice-consuming states are becoming self-sufficient in rice production and no longer require large quantities from outside for their public distribution schemes.

As a result, the monthly requirement for rice from Punjab, Haryana, and other major rice-producing states is only around 5.50-6 LMT, even though 34 LMT is used across various public distribution programmes. This situation could slow down the movement of grains procured in previous years, further exacerbating the storage issue.

As the state braces for the upcoming paddy procurement season, effective coordination between the Central and state governments and timely execution of grain movement plans will be crucial to mitigating the storage crisis.

Meeting over CCL release on Sept 25

To address the immediate need for funds, top officials from the Punjab Food and Supply Department will be meeting officers from the RBI on September 25 to request the release of ~48,380 crore as the cash credit limit (CCL) required for paddy procurement. The officials are hopeful that the CCL will be sanctioned before the start of the procurement season on October 1.