Govt control puts private paddy traders in trouble in Punjab

Once an important auxiliary to the government procurement agencies, the private traders’ participation in paddy procurement in Punjab has been on the downward trend.

The private traders, also known as the millers, can either purchase paddy through the levy route directly from the farmers or through the government agencies, called CMR (custom milled rice).

The trading by the private players in Punjab reached a peak in year 2003-04 when they lifted 4.07 million tonne paddy through levy against the procurement of 9.85 million tonne by the government agencies.

Thereafter it registered a consistent drop and stood at a meagre 0.32 million tonne in 2009-10 against the government procurement of 13.80 million tonnes.

Talking to Business Standard, Punjab Rice Millers’ Association President Tarsem Saini said they were in a Catch-22 situation.

“Ideally, the milling of paddy should be over by March 31. But, due to lack of storage facility with state agencies and FCI, milling is stretched beyond March. The delay in milling results in lower moisture content in paddy. This leads to lower output. We are supposed to extract 67 per cent rice from paddy but the lower moisture content results in lower volume of rice. This is our loss.”

According to him, 30 per cent of the total paddy provided to the millers is yet to be milled as the state agencies do not have storage capacities.

“In the wake of consistent revision of minimum support, price of paddy in the last few years dissuaded the millers to buy paddy through levy route. The withdrawal of incentives of levy, labour charges, stitching charges and low returns on gunny bags came as an icing on the cake,” said another miller from Sangrur.

“Our investment in terms of direct purchase of paddy has increased manifold due to high cost of paddy.”

While the MSP has been revised from Rs 560 per quintal (2004-05) to Rs 980 per quintal (2009-10) in the past few years, the milling charges have been revised only from Rs 15 per quintal, to Rs 18 per quintal (2004-05) on the recommendation of tarrif commission and this is not viable.

The freeze on the exports of rice is also responsible for the reluctance of the millers (the millers have to sell 25 per cent of the levy rice in the open market) as there are no takers of rice in the open market as it was mostly lifted by the exporters. The millers put the onus of delayed milling on the inefficeincies in FCI that is hugely short of manpower.

The millers in Punjab contend that the procurement specifications of FCI were too stringent and added that even the basmati rice meant for exports do not meet such specifications. “The FCI needs to amend its procurement specifications because the deal in milling puts us into jeopardy and results in huge loss of foodgrains,” added another miller.