The Hindu Business Line : Rice procurement set to scale new peak

New Delhi, Dec. 21 Rice procurement by the Food Corporation of India (FCI) and State agencies is slated to touch a new record in the ongoing 2008-09 marketing season (October-September).

As on Friday, total purchases for the Central pool had touched 137.81 lakh tonnes (lt), compared with 111.72 lt during the corresponding period of the 2007-08 season. At this rate, it looks as though the last season’s all-time-high rice procurement of 284.93 lt would be surpassed this time.

Progressive procurement so far has been higher this time in Punjab (80.97 lt versus 71.03 lt in the comparative period of 2007-08), Uttar Pradesh (12.75 lt versus 6.77 lt), Andhra Pradesh (10.62 lt versus 5.90 lt), Chhatisgarh (8.52 lt versus 7.95 lt) and Orissa (3.94 lt versus 3.14 lt), while declining in Haryana (13.58 lt versus 14.92 lt).

The step-up in official purchases has been mainly a result of lacklustre participation of the private trade. Millers and private dealers have till now bought just 8.16 per cent of the total paddy arrivals in the mandis of Punjab (as against 18.49 per cent for the same period of the previous season), with the corresponding proportions being 15.86 per cent (31.67 per cent) in Haryana.

There are a couple of reasons for this indifference. The first is the ban on exports of all non-basmati rice, which has eliminated one big source of private demand. The second has to do with the increase in official procurement price – from Rs 745 to Rs 900 a quintal for ‘common’ paddy and from Rs 775 to Rs 930 a quintal for Grade ‘A’ varieties – that has discouraged private buyers.

This is more so in a situation where opportunities from any increase in domestic prices, making purchases worthwhile, are limited. What it means is that a significant chunk of the paddy produced by farmers this time will end up in Government godowns. Government agencies bought a record 22.68 million tonnes (mt) – nearly 29 per cent – of the estimated wheat crop of 78.40 mt in 2007-08.

In the case of rice, they mopped up 28.49 mt or almost 30 per cent of the estimated output of 96.43 mt. The above trend is likely to continue this year too, with the Centre expected to announce a higher minimum support price (MSP) for the 2008-09 wheat crop to be marketed from April next.

The Commission for Agricultural Costs and Prices (CACP) has recommended an increase in the MSP of wheat from Rs 1,000 to Rs 1,080 a quintal, though it is learnt that the rate may be eventually fixed slightly lower at Rs 1,040 a quintal. As on October 1, wheat stocks in the Central pool stood at 220.25 lt (more than twice the normative minimum buffer of 110 lt for that date), while these amounted to 78.63 lt (52 lt) for rice.

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