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In a move that could increase the supply of rice in the retail markets, the Centre has directed states to reduce quota for levy rice, sold for public distribution system (PDS), from the existing 30-75 per cent to 25 per cent of the total produce of millers in the current procurement season, which began in October.
However, only Uttar Pradesh and Haryana have reacted favourably to the proposal, officials said. Other states, including the biggest contributor of rice to the central pool, Andhra Pradesh, are not game.
The Centre has decided to accept rice with 12 per cent broken content from millers under custom milled rice (CMR), against the norm of four per cent. This could enable millers to liquidate their rice stocks and undertake fresh processing.
However, for consumers, this could mean they would get inferior quality through PDS.
The government gets the rice for the central pool to be distributed through PDS by two ways: Custom-milled and levy rice.
In CMR, the government purchases husked rice from farmers and then allocates it to mills for processing for a fixed charge and rebuys again from them.
In the levy rice policy, millers are allowed to sell a certain percentage (25–70 per cent in major rice producing states) of rice procured by them in the open market, while the remaining (called levy rice) is collected by government agencies at a minimum support price (MSP).
In 2012-13, rice procurement season that ended in September, out of the total procurement of 34 million tonnes, around eight million tonnes or 23.5 per cent was levy rice, while the rest was procured through custom milling.
However, in 2013-14 procurement season, not a single grain of levy rice has been received so far.
Last year, of the eight million tonnes of levy rice received in the central pool, around 5.5 million tonnes was from Andhra Pradesh alone, while Uttar Pradesh contributed 1.09 million tonnes. Karnataka contributed 58,732 tonnes, while Haryana contributed 27,223 tonnes.
“This directive may ensure that in the open market supplies of rice could rise, while there would be more freedom for millers to sell their produce on market rates,” said a senior food ministry official.
The official said assuming the quantum of levy rice remains at the last year’s level, easily two-three million tonnes of additional stock can come in the open market. The government data showed that retail price of rice has risen by almost 30 per cent since 2011.
Officials said for farmers too, it would mean a good option as they would be free to sell their produce to anyone who pays higher price. But, in states like Bihar and UP, where the open market procurement price of rice is much below the Centre-fixed MSP, the proposal could impact the interest of growers.
