At the mercy of mar­ket

The gov­ern­ment's de­ci­sion to phase out pro­cure­ment of rice from millers for its public dis­tri­bu­tion sys­tem may in­crease small farm­ers' sus­cep­ti­bil­ity to mar­ket vari­a­tions

Down to Earth - - CONTENTS - |

Gov­ern­ment's de­ci­sion to stop rice pro­cure­ment from millers may make small farm­ers vul­ner­a­ble to mar­ket fluc­tu­a­tions

IN JULY 2014, the newly formed Na­tional Demo­cratic Al­liance gov­ern­ment took a de­ci­sion which did not at­tract much at­ten­tion but is likely to have far reach­ing con­se­quences.It de­cided to phase out procur­ing rice from millers for its public dis­tri­bu­tion shops.

To run the world’s largest public dis­tri­bu­tion sys­tem (pds) for food­grains, the gov­ern­ment pro­cures rice through two mech­a­nisms—cus­tomed miller rice (cmr) pol­icy and levy rice pol­icy. Un­der the first sys­tem, the gov­ern­ment buys paddy di­rectly from farm­ers at a min­i­mum sup­port price (msp) and gives it to millers for ex­tract­ing rice. Un­der levy rice pol­icy, the pro­cure­ment is through lo­cal rice millers who buy paddy from farm­ers at msp. As per the levy rice pol­icy, millers are al­lowed to sell a cer­tain per­cent­age of rice in the mar­ket, the rest be­ing pro­cured by the gov­ern­ment. The quan­tity al­lowed to be sold in the open mar­ket varies from 25 per cent to 75 per cent in dif­fer­ent states.

In the cur­rent sea­son (Novem­ber 2014-Jan­uary 2015), the Cen­tre has asked states not to pro­cure more than 25 per cent of its rice un­der the levy pol­icy. The process will com­pletely stop from the next sea­son.In an of­fi­cial re­sponse to Down To Earth, Sanjeev Hans, pri­vate sec­re­tary to the Union Min­is­ter of Con­sumer Af­fairs, Food and Public Dis­tri­bu­tion, con­firmed the de­ci­sion, say­ing, “We have de­cided to bring the pro­cure­ment of levy rice from 75 per cent to 25 per cent this year and to zero from next pro­cure­ment year.”

The de­ci­sion means that farm­ers would be able to sell paddy ei­ther to gov­ern­ment pro­cure­ment cen­tres or to the mar­ket. Farm­ers and ac­tivists have crit­i­cised the de­ci­sion, say­ing sell­ing paddy to pro­cure­ment cen­tres is not al­ways fea­si­ble be­cause they are of­ten non-func­tional or lo­cated at far-off places.The op­tion of sell­ing it to millers at msp gave a se­cu­rity which this

de­ci­sion will take away, they add. The gov­ern­ment ar­gues that the move would strengthen the rice mar­ket and help farm­ers in the longer run. It will also save thou­sands of crores of ru­pees. “Our as­sess­ment is that we can save nearly 4,000 crore to 5,000

` ` crore spent on pro­cure­ment, stor­age and move­ment of rice,” says Hans.

Likely im­pact

Ac­cord­ing to gov­ern­ment fig­ures, nearly 30 per cent of to­tal pro­cure­ment of rice in the coun­try is done un­der the levy pol­icy. This comes to 8-10 mil­lion tonnes of rice. This stock will now most likely flood the mar­ket where it will sell at a rate be­low msp. The de­ci­sion will af­fect erst­while un­di­vided Andhra Pradesh and Ut­tar Pradesh more than other states be­cause the share of rice pro­cured by them un­der levy pol­icy is 75 per cent and 60 per cent re­spec­tively. Sources say the Andhra Pradesh chief min­is­ter has al­ready lodged a protest with the Cen­tre against the de­ci­sion.

The de­ci­sion will have a big­ger im­pact on farm­ers of states where the mar­ket price of paddy is much lower than msp. Th­ese in­clude Ut­tar Pradesh, Andhra Pradesh, Bi­har, Ma­ha­rash­tra, Odisha and West Ben­gal. “In Ut­tar Pradesh, the mar­ket price of paddy is 800-`900 per 100 kg, much lower than msp ` of around 1,400 per 100 kg this year. The

` de­ci­sion will hit small farm­ers who are not able to ac­cess pro­cure­ment cen­tres,” says a se­nior Ut­tar Pradesh gov­ern­ment of­fi­cer on con­di­tion of anonymity.

Pro­cure­ment prob­lems

Pro­cure­ment of paddy from farm­ers is done through 14,000 pro­cure­ment cen­tres in the coun­try. Ex­perts say it is an open se­cret that a vast num­ber of pur­chas­ing cen­tres do not func­tion. “In Ut­tar Pradesh, pro­cure­ment was quite low in the past two years be­cause many pur­chas­ing cen­tres were non­func­tional,” says a Food Cor­po­ra­tion of In­dia (fci) of­fi­cial, re­quest­ing anonymity. Ac­cord­ing to fci, the state col­lected around 2.3 mil­lion tonnes of rice in 2012-13 which was one mil­lion tonne less than its col­lec­tion in the pre­vi­ous year.

Pro­cure­ment cen­tres also face charges of cor­rup­tion. They de­lay the pro­cure­ment process by 30-50 days to make small farm­ers, who do not have the re­sources to store paddy, sell it at a re­duced rate to lo­cal traders. “Th­ese cen­tres func­tion well in Haryana and Pun­jab where farmer lob­bies are strong but not in other states,” says Yud haveer Singh, con­vener of Bhar­tiya Kisan Union.

The move is also likely to en­cour­age adul­ter­ation. It will pro­vide millers the op­por­tu­nity of mix­ing the paddy they get for rice ex­trac­tion for pds with that of low qual­ity. This would ul­ti­mately af­fect pds con­sumers who will get sub­stan­dard rice.

An­other prob­lem as­so­ci­ated with pro­cure­ment cen­tres is their lo­ca­tions which keeps chang­ing al­most ev­ery year. The 70th round of the Na­tional Sam­ple Sur­vey Of­fice (nsso) re­port, pub­lished in De­cem­ber 2014, says only about 25 per cent of agri­cul­tural house­holds are aware of gov­ern­ment pur­chas­ing cen­tres in their area and about 30 per cent are aware of msp, but only 13 per cent ac­tu­ally go to pro­cure­ment cen­tres. “The de­ci­sion shows that the gov­ern­ment is in­di­rectly ask­ing farm­ers to sell their grains in the mar­ket at mar­ket price, ”says Bi­raj Pat­naik, a Delhi-based food rights ac­tivist.

Ini­tial signs

The in­di­ca­tions of the gov­ern­ment’s de­ci­sion were vis­i­ble soon af­ter it came to power last year. In June 2014, it asked states not to pur­chase grains from farm­ers at a rate higher than msp and warned that fci would not pro­cure grains from states who do so.

Ex­perts say that in the past cou­ple of years, the gov­ern­ment had pro­cured more rice than it needed to run pds. This is the rea­son the cur­rent gov­ern­ment wants to clear the stock. But clear­ing the stock can harm food se­cu­rity, says Ra­man­jyu­vlu GV from non-profit Cen­tre for Sus­tain­able Agri­cul­ture in Hy­der­abad. “The buf­fer stock of pro­cured rice would fin­ish by next year be­cause the Na­tional Food Se­cu­rity Act, 2013, which guar­an­tees rice at cheap rate to 830 mil­lion peo­ple, would re­sult in an in­creased con­sump­tion. There­after, the gov­ern­ment will have to start procur­ing rice from the mar­ket in­stead of farm­ers,” he says.

How­ever, the de­ci­sion has re­ceived sup­port from ex­perts who favour open mar­ket.The move, they say, will en­sure that farm­ers get paid the price their pro­duce de­serves. Ashok Gu­lati, for­mer chair­per­son of the Com­mis­sion for Agri­cul­ture Cost and Prices, a gov­ern­ment-ap­pointed com­mis­sion that rec­om­mends msp, says, “The con­cept of levy rice re­minds one of the so­cial­ist era.We should wel­come the gov­ern­ment de­ci­sion. Let the farm­ers and the con­sumers have the free­dom to ac­cess grains with­out any hur­dles,” he says.

“I feel it is a good move, but the gov­ern­ment should also en­sure bet­ter in­fra­struc­ture at pro­cure­ment cen­tres,” says Deven­dra Chouhan, gen­eral manager, Food Cor­po­ra­tion of In­dia, Ut­tar Pradesh.

Farm­ers, how­ever, are not con­vinced of the per­ceived benefits of the de­ci­sion. Prashant Ku­mar, who cul­ti­vates paddy in his 6 ha field in Ut­tar Pradesh’s Bi­jnor dis­trict, says the de­ci­sion would help big farm­ers like him be­cause he has more bar­gain­ing power and can sell rice in the open mar­ket. “But it would ad­versely af­fect small farm­ers who ben­e­fit more from the levy rice pol­icy,” he says. Farm­ers like Ku­mar are a mi­nor­ity. nsso data says about 80 per cent of farm­ers in the coun­try have small land hold­ings of less than 0.4 hectare.

Newspapers in English

Newspapers from India

© PressReader. All rights reserved.