Govt working on countering open-ended foodgrains procurement policy

Food Min meets PM, Agri Min to discuss procurement policy

Saddled with huge foodgrains stocks and burgeoning subsidy bill, the food ministry is working on a long-term policy on foodgrains procurement.

Officials said the need for such a policy has emanated because of the open ended nature of foodgrains procurement, wherein whatever is brought in the market by farmers is sold by state agencies, leading to a mammoth stocks in state warehouses and a subsidy bill running into crores.

"There has to be some solution to this and the open ended nature of foodgrains procurement cannot continue for long," the official said. Food Minister K.V. Thomas met Prime Minister Manmohan Singh today and also held discussion with agriculture minister Sharad Pawar to discuss the broad contours of such a policy.

"Earlier, state agencies and Food Corporation of India (FCI) used to procure 25-30% of the total marketable surplus of foodgrains, but in the last few years we have procured over 35% of the surplus," the official said.

Such huge procurement puts undue pressure on food subsidy, requirement of which is expected to reach over Rs 100,000 crore in 2012-13 financial year as against a Budget Estimate of Rs 75,000 crore. Foodgrains stocks in the central pool as on October 1 is estimated to be over 70 million tonnes, as against a available storage space of 66 million tonnes.

However, this could get worse as the government plans to procure around 40 million tonnes of rice for the central pool in 2012-13 crop marketing that started in October 1, 2012, around 4-5 million tonnes more than the actual procurement of last year.

"This open ended procurement of foodgrains by FCI and state agencies leaves very little marketable surplus for private traders leading to shortage of grains for retail markets," the official.

This year, too, wheat flour prices in the open market flared up because of low purchases by private traders. "To counter this shortage, government will release another 7 million tonnes of wheat in the open market, over and above the already released 7 million tonnes," the official said.