Cabinet likely to announce paddy procurement bonus this week

Giving in to the demand of state governments, the Union Cabinet is likely to decide the bonus for paddy procurement this week, a senior government official said on Monday.

The government has set the minimum support price for common grade paddy at Rs 850 per 100 kg, up from Rs 745 in the previous year, and for fine grade paddy at Rs 880, up from Rs 775.

To ensure it is able to meet its rice procurement target of 28.4 million tonne (MT) this year, the Department of Food has recommended a bonus of Rs 50 per 100 kg on paddy buys.

The official said the Cabinet, however, is likely to set the bonus higher at about Rs 100 per 100 kg to ensure a procurement price closer to the Commission on Agricultural Costs and Prices’ recommendation of Rs 1,000 per 100 kg.

The move will also probably help appease Andhra Pradesh and Tamil Nadu governments, which have been demanding paddy support price of Rs 1,000 per 100 kg since last year.

The two state governments had last year stopped farmers from selling paddy to Food Corp. of India to pressurise the Centre to increase paddy support price to Rs 1,000 to align it with wheat support price, which was raised to Rs 1,000 per 100 kg from Rs 850.

Though the government did not accede to the demand of the two states last year, it started procuring paddy from Andhra Pradesh and Tamil Nadu at Rs 850 from June.

The Cabinet had announced the ad hoc paddy procurement price of Rs 850 per 100 kg for the 2008-09 (October-September) procurement season on June 24.

In an unusual move, the government allowed FCI to procure paddy from the two states at Rs 850 from June instead of October.