The Hindu Business Line : <I>Buffer stocks: What is FCI actually paying? </I>

Chennai March 27 Though the Food Corporation of India (FCI) could be paying Rs 850 for a quintal of wheat to be procured for buffer stocks, it will actually end up spending at least Rs 975 a quintal for the purchase taking into account other overheads.

These costs are fixed ones but there is a small rise in these in view of the Rs 100 per quintal bonus being offered to farmers. For the bonus itself, the Centre is seen spending an additional Rs 1,500 crore.

Wheat brought to the mandis has to be necessarily auctioned and FCI will have to pay 0.8 per cent auction fees. This apart, it will have to foot a two per cent market fee. Another two per cent has to be paid for rural development fund and if the procurement is in Punjab, an extra one per cent will have to be incurred for the State's infrastructure fund cess.

Then, comes the payment of 2.5 per cent as fees for the Kachchi adat or the person who buys the wheat from the farmers and brings it to the mandis or terminal markets. Charges for labour cost are another per cent besides four per cent VAT.

Then, one per cent will go towards pakki adat or the person who weighs and bills the consignment.

These apart, transportation charges will have to be paid that could range between Rs 15 and Rs 40 a quintal depending on the distance of the mandis from the farmer's field.

In all, the charges will be around Rs 975 a quintal.

Taking all these into consideration, what will the Government have to incur in its procurement for buffer stocks?

The Centre has set a procurement target of 150 lakh tonnes. If it attains its target, it would have well spent close to Rs 15,000 crore.

The calculation does not take into consideration the costs that will be incurred in payment of interest by FCI as well as warehouse charges.