Centre not budging on paddy procurement: Chhattisgarh CM

On Monday, at the winter session of the Chhattisgarh legislative assembly, Chief Minister Bhupesh Baghel lashed at the Centre for refusing to procure paddy at the rate of ₹ 2,500 per quintal.


Baghel noted that the Centre had fixed the minimum support price of paddy at 1,815 per quintal for common grade and 1,835 for grade A paddy, and that the Centre is not ready to cooperate with the government for procuring paddy at a higher rate from Chhattisgarh farmers.

However, Chief Minister Bhupesh Baghel assured that farmers would get 2,500 per quintal “in their pockets”, saying a ministerial sub-committee had been set up to find other resources that can pay the difference between the MSP and the procurement cost. Blaming the Centre, Baghel said it did not respond to repeated petitions to acquire paddy into the central pool despite the proposed higher MSP.

The sub-committee will submit a report quickly, he noted, further saying, “The Centre has put an obstacle on giving bonus, so we will give it some other way. Other states have KALIA or Rythu Bandhu, farmers will get justice in our state as well.”

What is procurement?

The foodgrain procurement policy finds its roots in the 1960s when India was facing an agricultural shortage of cereals as a way to ensure food security. The foodgrains are procured at a Minimum Support Price–a minimum guaranteed price that sets a floor below which market prices are unlikely to fall. The government will buy the stock at this decided MSP if the farmer cannot sell their produce at a better price elsewhere.

The Food Corporation of India (FCI) was set up in 1964 to procure foodgrains from farmers of the nation at remunerative prices, so as to distribute them using the public distribution system and maintain buffer pool stock.

The Committee for Agricultural Costs and Prices (CACP) formulates a Price Support Policy to determine the MSP for 22 crops before their sowing seasons.

The decided MSP helps the farmer make revenue estimates, which gives them enough financial breathing space to cover expenses, make better borrowing decisions and invest into long-term betterment of their agricultural business.

The issue

In its state election manifesto last year, the Indian National Congress had promised that paddy farmers of Chhattisgarh will be paid 2,500 for each quintal of paddy that the State procures for the 2019-20 year, which they followed through. This rate is about 700 more than the Minimum Support Price (MSP) fixed as per this year’s CACP Price Policy for Kharif Crops, with the per quintal MSP for common paddy to be 1815, and that of Grade A paddy to be 1835.

What this means is, as per the Procurement Policy, the Chhattisgarh government purchased foodgrains from farmers at the rate of MSP with the addition of any bonus declared by the state government over and above the MSP. The Chhattisgarh government itself undertook direct purchase of paddy, its storage and distribution under the National Food Security Act and/or other welfare schemes.

Under the Decentralized Procurement System (covered under the Procurement Policy), the Central Government is required to meet the entire expenditure incurred by the state government on the procurement operations, but only as per the approved costing (the MSP). This means that the Centre can only be held liable to cover procurement costs of the State upto the Minimum Support Price that it has guaranteed, leaving the Chhattisgarh government to cover the excess 700 of every quintal procured.

Additionally in early November 2019, the Union Secretary for Food and Public Distribution had specifically informed the Chhattisgarh government that it won’t be purchasing rice from the state if its government gives bonus to paddy farmers as against its procurement.

Writing to the Chief Secretary of Chhattisgarh, he pointed towards a clause of MoU signed by Chhattisgarh and the Centre for rice purchase that clearly states, “… if State Govt. declares the bonus over and above the MSP fixed by Govt. of India, the Central Govt. would limit the procurement for Central Pool to the extent of requirement of rice for TPDS (Targeted Public Distribution System) /Other Welfare Scheme (OWS) allocations of that State.” Since the Central pool stock is already much above the buffer norms, he stated that they will not be purchasing rice from the state.

On November 20, the Indian National Congress staged a walkout from the Lok Sabha session to protest the government’s decision. Adhir Chowdhury, Congress’s leader at the Lok Sabha, raised the issue during the Zero Hour to reiterate the state government’s demand that the Centre ensures procurement of 32 lakh metric ton of paddy at the rate of 2,500 per quintal in Chhattisgarh for central pool, or slacken the procurement rules so that paddy could be procured from the state for the central pool and the state government could continue providing bonus to the farmers in addition to the MSP.

On November 15 in New Delhi, Baghel protested the Central government’s decision not to increase procurement of rice for the central pool from the state. On November 19, Chhattisgarh’s CM Bhupesh Baghel had implored PM Modi via a letter to procure paddy from the state at the higher rate, stating that the move is the reason Chhattisgarh has not been affected by the economic slowdown that has arrested the rest of the country.

With respect to this issue, Union Minister Ram Vilas Paswan addressed a letter to Chhattisgarh government, in which he stated, “This year we are expecting good rice crop and about 416 lakh million tonne (LMT) rice would be stocked. With this expected good purchase storage and liquidation of rice will be a serious problem. Also, the liquidation of additional rice is very less and due to agreement with world trade organization (WTO), the public stock cannot be exported.”

It is worth noting that Agriculture, including Agriculture Marketing is a State subject, and so the Centre is not constitutionally bound to accept foodgrains at increased rates or in larger quantities than what it has agreed to in its dealings with the state. 



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