Foodgrain procurement in India is done either by the Food Corporation of India (FCI) directly or by State Government Agencies (SGA). FCI was established under the Food Corporation Act of 1964 with the following objectives:
- Effective price support operations for safeguarding the interests of the farmers through Minimum Support Price (MSP) on food grains (Rice, Wheat, and coarse grains).
- Distribution of food grains throughout the country for the Public Distribution System (PDS) and other schemes.
- Maintaining a satisfactory level of o ,perational and buffer stocks of foodgrains to ensure National Food Security.
Traditionally, Punjab has been the number 1 contributor to the Central Pool, where wheat is procured through Arhtiyas (commission agents) as per the state APMC Act. In other states, wheat (or paddy) is procured directly from the farmers by FCI or SGAs. The procurement period differs from state to state and mainly happens during the current marketing season.
Minimum Support Price (MSP): Overview
MSP is a decentralized (DCP)/centralized (non-DCP) process of market intervention by the Government of India to secure agricultural producers against any sharp fall in farm prices. It is announced by the Government of India at the beginning of the sowing season for certain crops. The government announces MSPs for 22 mandated crops and fair and remunerative price (FRP) for sugarcane. However, there is no law backing for MSPs.
Challenges Faced by Farmers
Farmers face several challenges, such as the imposition of value loss by the Ministry of Food, delay in payment of MSP against wheat procurement, and less production last year due to a spike in March temperatures and an increase in private purchases.
Government Decision-Making on MSP
The amount of MSP is declared by the government before the sowing of the crop every year. It is declared on the recommendation of the Commission for Agricultural Cost and Prices (CACP).
Procurement Cost to the Government
FCI defines procurement cost as “the total cost” of procurement, which includes acquisition and distribution costs, MSP, incidental costs of procurement, state taxes, commission to Arhtiyas or societies, cost of bagging materials, mandi labour, transportation to the depot, etc.
Annual Requirement of Wheat for Government Schemes
The annual offtake from the Central Pool has been for distribution under the National Food Security Act, 2013, and other welfare schemes like the Pradhan Mantri Garib Kalyan Anna Yojana and Atma Nirbhar Bharat program for migrant workers amid the pandemic.
Why In News
Foodgrain procurement in India has seen a significant increase in the current marketing season, with wheat procurement by the Food Corporation of India (FCI) and State government agencies surpassing last year’s procurement. This rise in procurement is a positive sign for the farmers who depend on the Minimum Support Price (MSP) and will help in maintaining buffer stocks for national food security. It also highlights the effective implementation of MSP and procurement policies by the government.
MCQs about Foodgrain Procurement in India
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What is the purpose of the Food Corporation of India (FCI)?
A. To provide effective price support operations for safeguarding the interests of farmers
B. To sell foodgrains to other countries
C. To distribute foodgrains to private companies
D. To control the price of foodgrains in the market
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What is the role of Arhtiyas in wheat procurement in Punjab and Haryana?
A. Procuring wheat from farmers
B. Selling wheat to private companies
C. Distributing wheat to other states
D. Transporting wheat to the depots
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What is the minimum support price (MSP) in India?
A. A decentralized/centralized process of market intervention by the government of India to secure agricultural producers against any sharp fall in farm prices
B. A fixed price for all agricultural products
C. A price set by private companies for agricultural products
D. A price set by farmers for their own agricultural products
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