Purchases at MSP: Govt likely to transfer record Rs 2.7 lakh crore to farmers of paddy & wheat this crop year
Published on: February 3, 2022.
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The government is likely to transfer a record Rs 2.7 lakh crore to farmers for procurement of rice and paddy under the minimum support price (MSP) operation by the Food Corporation of India (FCI) and state agencies in 2021-22 crop year (October-September).
Sources told FE that while Rs 2.37 lakh crore has been transferred to farmers for procurement of 120 million tonne (MT) paddy and wheat so far while the paddy procurement for Rabi season is expected to commence from April 2022 in southern states including Tamil, Andhra Pradesh and Telangana.
The FCI and state agencies could purchase around 17 MT of paddy from the farmers in southern states in the current crop season, said sources. This would take the total procurement of paddy and wheat during the 2021-22 crop season (October-September) to more than 137 MT, which would be a record.
In 2020-21 (crop year), Rs 2.44 lakh crore was transferred to farmers for procurement of more than 128 MT of paddy and rice under the MSP operations while in 2019-20 (crop year), Rs 2.04 lakh crore was provided to farmers for procurement of 111 MT of paddy and wheat by FCI and state government agencies.
FCI and state agencies procure wheat (a rabi crop) during the April-June period while paddy is procured during October –September as the cereal is harvested in both kharif and rabi seasons.
In her Budget (2022-23) speech, finance minister Nirmala Sitharaman said “the procurement of wheat in rabi (2021-22) and the estimated procurement of paddy in kharif 2021-22 will cover 1,208 lakh metric tonnes of wheat and paddy from 163 lakh farmers, and Rs 2.37 lakh crore direct payment of MSP value to their accounts.”
FCI and state agencies procure paddy and wheat from the farmers mostly from Punjab, Haryana, Madhya Pradesh, Chhattisgarh, Odisha, Telangana and Andhra Pradesh through MSP operations. The highly subsidized food grains procured from farmers are supplied under the National Food Security Act (NFSA) to more than 80 crore beneficiaries as well as kept as buffer stocks for dealing with exigencies.
However, because of an open-ended procurement system, FCI and state agencies procure far more volume of grain than required under NFSA leading to excess grains stocks.
At present, FCI and state government agencies have rice and wheat stocks of 54.89 MT against the buffer stocks norms of 21.41 MT for January.
Under the Price Support Scheme of the agriculture ministry, the farmers’ cooperatives like NAFED procure pulses and oilseeds from farmers to maintain buffer stocks. NAFED procures from the farmers by paying MSP if prices fall. Similarly, Cotton Corporation of India (CCI) commences procurements from farmers when market prices fall below MSP.
Source: https://www.financialexpress.com/economy/purchases-at-msp-govt-likely-to-transfer-record-rs-2-7-lakh-crore-to-farmers-of-paddy-wheat-this-crop-year/2424309/
