The story so far: The relationship between the Bharatiya Janata Party (BJP)-led Government at the Centre and the Telangana Rashtra Samithi (TRS) Government has deteriorated over the past few weeks over the issue of paddy procurement. The TRS Government insists that 90% of the paddy produced in the State should be procured by the Centre and that the Centre should complete the balance procurement of rice of the last Rabi season. The Centre says it has enough stock of parboiled paddy to last for four years and will not be able to procure more than what has been promised by the Food Corporation of India (FCI).
Procurement of paddy is an exercise involving both the State and Central Governments. The State Civil Supplies Corporation (CSC) along with a few other State government agencies purchase paddy from farmers at the minimum support price (MSP) by opening procurement centres at the village level on behalf of the FCI. They borrow money from banks, with the State Government standing as the guarantor to pay the amount to farmers within seven to 10 days of purchase. The paddy that is purchased is then moved to mills and processed as custom milled rice (CMR) as required by the FCI. For every 100 kg of paddy, the miller gives back 68 kg of parboiled rice or 67 kg of raw rice. The CSC then repays the borrowers/banks.
Since the formation of Telangana, procurement of paddy has gone up by almost five times during the 2014-15 to 2020-21 marketing seasons thanks to improvement in the irrigation potential of the State. According to CSC data, the procurement of paddy was 24.27 lakh tonnes in the two crop seasons of 2014-15. It went up to 23.55 lakh tonnes in 2015-16, 53.68 lakh tonnes in 2016-17, 53.98 lakh tonnes in 2017-18, 77.46 lakh tonnes in 2018-19, 111.26 lakh tonnes in 2019-20 and 140.8 lakh tonnes in 2020-21.
In 2021-22, the Kharif season is coming to an end and harvesting is in progress. As per the Ministry of Agriculture and Farmers Welfare, the extent of paddy cultivated in Telangana in the Kharif season is 59.35 lakh acres and the estimated production is about 113 lakh tonnes. However, as per the State Agriculture Department, the extent of cultivation is 61.95 lakh acres and the estimated production is at least 140 lakh tonnes.
The issue is about procurement of paddy or lifting of rice by the FCI during both the crop seasons. The FCI has given a commitment to lift only 40 lakh tonnes of raw rice this Kharif season against the estimated rice production of 75.5 lakh tonnes (Ministry of Agriculture) and 94 lakh tonnes (State government). Telangana is demanding that the CMR from the entire paddy procured be lifted, as being done in Punjab and Haryana. Or, it says, the State Government must be informed a year in advance about the quantity to be lifted by the FCI, so that it can guide farmers appropriately.
The Centre (FCI or Department of Food and Public Distribution) announced in September this year that it would not lift parboiled rice from Telangana and Andhra Pradesh from the 2021-22 marketing season as it has enough parboiled rice stocks for at least four years. Parboiled rice-consuming States such as Kerala are also producing such rice, which was not a practice in the past.
The Telangana-specific problem is that production of raw rice is not possible in the State during the Rabi season as temperatures are high causing a high percentage of broken rice in CMR.
The State government says it is not possible for it to manage parboiled rice stocks as storage space and exports are handled by the Centre. It wants incentives for exports of parboiled rice as the State is land-locked.
The State Government says it will take at least a couple of crop seasons to educate farmers against cultivating paddy in the Rabi season and to encourage them to diversify crops. It has already identified pulses and oilseeds as alternative crops for areas having irrigation potential. But here too, market intervention in the form of MSP purchases by the Government is necessary to keep rates of such crops reasonable in the markets to prevent exploitation by traders.
To overcome fluctuations in the market and to ensure reasonable returns to farmers, the State Government is also seeking enactment of a law on MSP by the Centre now.
