The paddy procurement crisis in Punjab has reached a critical juncture in 2024. Despite favourable weather conditions, only 37.68 lakh tonnes of paddy have been procured by the Food Corporation of India (FCI) as of late October, below last year’s figures. The ongoing issue of storage shortages and logistical challenges has exacerbated the situation, with private rice millers hesitant to accept government paddy due to concerns over storage capacity and financial losses.
About Paddy Procurement
Paddy procurement is a systematic process overseen by the Centre, state governments, and the FCI. Each year, prior to the kharif marketing season, estimates for procurement are finalised. State agencies purchase paddy from farmers at the Minimum Support Price (MSP) during a designated period. The procured paddy is milled, and the resulting rice is stored for buffer stock or distributed under welfare schemes such as the National Food Security Act (NFSA).
Current Status in Punjab
As of late October, Punjab has experienced an important slowdown in procurement. With only 22% of the paddy crop harvested, farmers are deliberately delaying the process due to a lack of storage space in mandis. This year, only 10.55% of procured paddy has been moved out of the mandis, compared to nearly half last year. The peak procurement season ends in the first week of November, adding urgency to the situation.
Factors Contributing to the Crisis
Three primary factors are contributing to the current crisis in Punjab: 1. Lack of Storage Space – The inability of private rice millers to accommodate government paddy has resulted from a backlog of approximately 124 lakh tonnes of milled rice in government godowns. Millers are reluctant to store additional paddy due to concerns about long-term storage costs. 2. Controversy Surrounding Hybrid Varieties – The introduction of certain hybrid paddy varieties has led to lower milling out-turn ratios (OTR) than required by FCI standards. Millers face financial penalties if they cannot meet the OTR of 67%, with hybrid varieties yielding only 60% to 62%. This has created a loss-making scenario for millers. 3. Labour and Commission Agent Demands – Arhtiyas, or commission agents, have escalated their demands for compensation, seeking a percentage of crop purchases instead of fixed remuneration. Mandi labourers are also pushing for higher wages, further complicating the procurement process.
Impact of Delayed Procurement
The delay in paddy procurement poses several risks: – Economic Distress for Farmers – With only 22% of the crop harvested, farmers face potential losses due to spoilage and quality deterioration. A prolonged delay could lead to distress sales, impacting their income. – Disruption of Agricultural Cycles – Delays in harvesting paddy threaten the timely sowing of winter wheat, which could disrupt the agricultural calendar and lead to increased stubble burning, exacerbating air pollution in North India. – Potential for Unrest – The ongoing crisis may lead to farmer unrest, posing a challenge to law and order in Punjab, which could further complicate the government’s ability to manage the situation.
Proposed Solutions
To mitigate the crisis, the government must explore immediate and long-term solutions: – Temporary Storage Solutions – Utilising Punjab’s numerous rice mills for temporary storage could alleviate the current backlog. This requires addressing millers’ concerns regarding OTR and seed certification. – Improved Coordination – Enhanced collaboration between procurement agencies, transportation networks, and storage facilities is essential. Timely payments to arhtiyas and addressing labour demands will also improve the procurement process. – Crop Diversification – In the long term, Punjab must diversify its crop base to prevent surplus production, which is at the heart of the current crisis.
Questions for UPSC:
- Discuss the role of the Food Corporation of India in the procurement of paddy in India.
- Examine the impact of hybrid paddy varieties on the procurement process in Punjab.
- What measures can be taken to improve the paddy procurement system in Punjab?
- Analyse the socio-economic implications of delayed paddy procurement for farmers in Punjab.
- How does the issue of labour and commission agents affect agricultural procurement in Punjab?
