Reforming India’s Foodgrain Procurement and Crop Diversification

India’s foodgrain procurement system faces critical challenges amid rising stockpiles and crop imbalances. Recent controversies in Tamil Nadu over paddy procurement show systemic issues. The government’s procurement and subsidy policies have led to surplus rice stocks alongside rising imports of pulses and edible oils. This situation calls for a reassessment of procurement strategies, crop diversification incentives and supply chain reforms.

Current Status of Paddy Procurement

Paddy procurement has surged nationwide, with rice stocks nearly double the required norms. As of October 2025, rice stocks stood at 356.1 lakh tonnes against a norm of 102.5 lakh tonnes. Tamil Nadu’s short-term kuruvai season saw an unexpected increase in paddy cultivation by two lakh acres. Farmers prefer paddy due to assured minimum support prices (MSP), making it a safer crop option despite oversupply risks.

Stock Imbalances and Food Subsidies

India’s rice procurement far exceeds consumption under the Public Distribution System (PDS). Between 2022 and 2025, annual rice procurement ranged from 525 to 547 lakh tonnes, while offtake under PDS was between 392 and 427 lakh tonnes. Wheat utilisation in PDS has been more balanced, sometimes exceeding procurement. The government spends approximately ₹2 lakh crore annually on food subsidies, denoting financial strain amid surplus rice stocks.

Challenges in Pulses and Edible Oil Production

Despite being the world’s largest pulse producer, India imports pulses worth ₹30,000 crore due to weak procurement and market linkages. Edible oil imports meet 55% of domestic demand, costing ₹1.2 lakh crore in 2023-24. The Russia-Ukraine conflict intensified import costs. Domestic oilseed production remains stagnant, barely crossing 400 lakh tonnes since 2014, despite stable cultivation area.

Impact of Procurement Policies on Crop Patterns

The assured MSP for paddy encourages monoculture, risking soil health and crop diversity. Lack of incentives for pulses and oilseeds limits diversification. The existing centralised procurement system often delays payments and is prone to inefficiencies and corruption. These factors discourage farmers from switching crops or adopting sustainable practices.

Role of Farmer Producer Organisations and Market Linkages

Farmer Producer Organisations (FPOs) remain underutilised but hold potential to improve procurement, supply chains, and crop diversification. FPOs can educate farmers on soil health, market demand and provide financial and technical support. Direct market linkages between farmers and end-users, such as food processors, can reduce intermediaries and increase farmers’ incomes.

Policy Recommendations for Sustainable Agriculture

Encouraging crop diversification requires area-specific market studies and financial support. Allowing free export of surplus rice can reduce stockpiles. Capacity building for FPOs, cooperatives and self-help groups can strengthen local procurement and distribution. A collaborative effort among policymakers, agricultural experts and farmers is essential to reform the procurement system and ensure long-term food security.

Questions for UPSC:

1. Critically analyse the impact of India’s Minimum Support Price system on agricultural diversification and sustainability.
2. What are the challenges in India’s Public Distribution System with respect to foodgrain procurement and distribution? How can technology improve its efficiency?
3. Explain the role of Farmer Producer Organisations in strengthening agricultural markets and supporting crop diversification with suitable examples.
4. With regard to India’s edible oil imports, critically examine the factors affecting domestic oilseed production and suggest policy measures to reduce import dependency.

Answer Hints:

1. Critically analyse the impact of India’s Minimum Support Price system on agricultural diversification and sustainability.

1. MSP primarily benefits paddy and wheat, leading to monoculture and neglect of other crops.
2. Assured MSP encourages farmers to grow paddy for guaranteed income, reducing crop rotation.
3. This results in soil degradation and decreased long-term agricultural sustainability.
4. Lack of MSP or weak procurement for pulses and oilseeds discourages diversification.
5. Overproduction of rice causes surplus stocks, financial strain on government subsidies.
6. Need for MSP reform to incentivize diversified cropping and sustainable practices.

2. What are the challenges in India’s Public Distribution System with respect to foodgrain procurement and distribution? How can technology improve its efficiency?

1. Procurement delays and corruption lead to inefficiencies and farmer distress.
2. High foodgrain stockpiles indicate mismatch between procurement and consumption.
3. Leakages and wastage during storage and distribution cause losses (~28%).
4. Complex supply chains with limited transparency hinder effective delivery.
5. Technology like digitized supply chains, biometric authentication, and GPS tracking can reduce leakages.
6. Use of data analytics and real-time monitoring can optimize stock management and distribution.

3. Explain the role of Farmer Producer Organisations in strengthening agricultural markets and supporting crop diversification with suitable examples.

1. FPOs enable collective bargaining power, improving farmers’ market access and income.
2. They facilitate direct linkages between farmers and buyers, reducing intermediaries.
3. FPOs provide technical support on soil health, crop choices, and sustainable practices.
4. Examples like West Bengal’s use of FPOs in paddy procurement show reduced burden on government agencies.
5. FPOs can organize farmers for diversification into pulses, oilseeds, and other crops.
6. Capacity building and government facilitation are crucial for FPO effectiveness.

4. With regard to India’s edible oil imports, critically examine the factors affecting domestic oilseed production and suggest policy measures to reduce import dependency.

1. Stable cultivation area (~25 million hectares) but stagnant oilseed production limits supply growth.
2. Cheaper edible oil imports since 1990s discouraged domestic production expansion.
3. Price volatility and import dependence expose India to global supply shocks (e.g., Russia-Ukraine war).
4. Inadequate procurement and MSP support for oilseeds reduce farmer incentives.
5. Policy measures – increase MSP for oilseeds, promote crop diversification, invest in R&D and irrigation.
6. Encourage domestic processing industries and reduce import tariffs selectively to protect farmers.