Paddy procurement rises in eastern India

Procurement, though, still miniscule as compared to total procurement from traditional sources

After the impressive gain in foodgrain production over recent years in eastern India, procurement has also started picking up there. Particularly in Assam, Jharkhand, West Bengal and eastern Uttar Pradesh.

The procurement, though, is still miniscule as compared to the total procurement from the traditional sources of Punjab, Haryana and Andhra Pradesh. As of end-April, 6.56 million tonnes of paddy was procured from Assam, Jharkhand, Bihar, West Bengal and east UP in the 2015-16 season that started in October. This is 61 per cent more than that in the same period last year.

Bihar, though, is a laggard and the total paddy procurement is lower than in 2014-15 till the end of April. In all from across the country, till Monday, around 32 mt of rice had been purchased by the government, as against 27.3 mt in the same period last year.  

The rise has come with involvement of the private sector for rice procurement on behalf of Food Corporation of India (FCI), on an experimental basis. Critics of the entry of private trade in this area are worried. “Why can’t the Centre employ more people in FCI’s eastern India operations, rather than funding some private company to procure grain for it?” said Devinder Sharma, a food policy expert.

The earlier experiment with involvement of private players in foodgrain procurement for the government was in 2006-07. It was discontinued after companies found the proposition unviable. This time, the Centre and FCI worked out in more detail the modalities of involving private entities. They've got three such companies. One is National Collateral Management Ltd (NCML) for rice procurement in UP, Jharkhand and West Bengal. The other two firms are Veerprabhu Marketing and Farmers Fortune (India).

  Food Minister Ram Vilas Paswan had told the Rajya Sabha that private companies so hired are to furnish daily procurement reports to FCI. The latter has the right to inspect purchase centres, storage points and miller premises; it will also do quality checking of rice at the time of acceptance at its depots.

Paswan said FCI would evaluate the performance of private players and impose a penalty for any minuses. These companies have to mandatorily make the minimum support price payment to farmers, electronically, within 48 hours of procurement. In UP, NCML is to procure rice from the general areas of Ballia, Mau, Ghazipur and Chandauli.

Veerpradhu Marketing has been awarded Allahabad, Kaushambhi, Pratapgarh and Sultanpur. And, Farmers Fortune has been given a cluster covering Ambedkarnagar, Basti, Sant Kabirnagar and Siddarthnagar.  In Jharkhand, NCML has been given two clusters covering the regions of South Chottanagpur and Kolhan. In West Bengal, Veerprabhu Marketing has been awarded four clusters covering the Bankura, Burdwan, Dinajpur and Siliguri areas.

A committee on reforming of FCI, formed under the chairmanship of former Union agriculture minister Shanta Kumar, had said FCI should procure more from the eastern states and less from Punjab and Haryana.

“I’am worried that given the poor financial position of FCI and its reliance on short-term loans, whether it is sustainable in the long run for FCI to spread its operations wider. Unless a way is found to adequately finance FCI, the bubble might burst as the Corporation is bound to purchase the surplus, while the selling is not efficient,” said Alok Sinha, a former chairman of FCI.