New Delhi: Amid rising coronavirus cases in India and the ongoing nationwide lockdown to deal with the pandemic, the agriculture sector has been reeling under a crisis relating to the procurement of rabi crop. In several states, most of the rabi crop has been harvested and farmers are awaiting an appropriate announcement from the government regarding the procurement of crops and their management.

The central and state procurement agencies will have to adopt a fairly decentralised approach to eliminate the possibility of any threat from the epidemic during procurement, such as procuring from centres set up at single or multiple village level.

Procurement centres play a crucial role in ensuring that farmers receive remunerative prices for their crops. However, official data shows that the Centre and state governments have been unable to effectively set up and operate procurement centres.

The situation is such that between 2015-16 and 2019-20, wheat procurement centres fell by 25% in the country even though wheat production increased during that period.

The main factor behind the decline is the situation in Bihar. According to data from the Food Corporation of India (FCI) accessed by The Wire, 9,035 procurement centres were set up in Bihar in 2015-16 for the purchase of wheat which decreased by more than 82% to 1,619 centres in 2019-20.

Meanwhile, 7,457 centres were set up for wheat procurement in the state in 2016-17, 6,598 centres in 2017-18, and 7,000 in 2018-19.

Owing to the shortage of such centres, a large number of farmers are unable to avail the Minimum Support Price (MSP) and the price of agricultural produce in the market remains much lower than the MSP.

The impact of the decline in procurement centres on wheat procurement in the state is evident as, during the last five years, not even 1% of the total wheat produced has been procured in Bihar.

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Last year, only 0.05% of the total produce was procured in Bihar. Earlier, in 2018-19, only 0.29% wheat was procured even though Bihar accounted for 5.8% of total wheat production in the country.

The government of India purchases rabi and kharif crops at MSP every year at a stipulated time. The food grain is distributed under the food security schemes of the Centre, mid-day meals, nutrition programs, etc. A buffer stock is also stored up to a level which is used to meet public food requirements during exigencies like the coronavirus pandemic.

There are mainly two methods of procurement. First, the FCI procures excess stocks for the central pool through the state or its own agencies.

The second is the decentralised procurement system (DCP) under which the state government itself undertakes the direct purchase of grains, their storage and distribution in the state. The surplus that remains after the allocation of food grains for welfare schemes in the state is then handed over to FCI for the Central Pool stocks.

In case, there is a shortage of essential food grains in a state under the National Food Security Act (NFSA), the FCI meets the demands by procuring grains from other states.

Currently, 17 states in the country fall under the purview of the DCP. Bihar adopted the DCP system for procurement of wheat and paddy in the kharif season of 2013-14, under which procurement is carried out through trade unions or bodies and Primary Agricultural Credit Society (PACS).

However, the condition in Bihar is so poor that the state is unable to procure wheat for distribution under the Public Distribution System (PDS).

Bihar FCI general manager, Sandeep Kumar Pandey, said, “During the last five or six years, wheat procurement in Bihar has been almost nil. We fulfil 80% of the state’s requirement of food grains by purchasing from outside.”

Former MLA of Bihar and general secretary of Akhil Bhartiya Kisan Mahasabha, Rajaram Singh says, “A major reason why there is no procurement in the state is that the farmers here are not landowners.”

He said that a significant portion of agricultural activity is carried out on leased land. Since the tenant farmers do not possess papers of the land, they are unable to sell the produce on MSP.

He said, “After a long struggle, the farmers succeeded in principle when those who do not own land and work as tenant cultivators were allowed to sell their produce on MSP. But it was never implemented. When a farmer takes his grains to the market, he is asked for papers which he is unable to provide.”

In Rajasthan, another major wheat-producing state, there already existed a limited number of procurement centres but during the last five years, the number has further declined.

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In 2015-16, 271 centres were set up in Rajasthan for wheat procurement. Of these, 155 belonged to FCI while 116 belonged to state agencies. However, the number has fallen to 204 by 2019-20. In 2016-17, the number of centres was 303, 208 in 2017-18 and 229 in 2018-19.

Last year, 1.4 million tonnes of wheat was procured in Rajasthan, which is 14.57% of the total harvest. During this period, Rajasthan accounted for 9.3% of total wheat production in the country. However, the number of farmers benefitting from the MSP is still quite less as only 4% of farmers in Rajasthan are eligible for availing the MSP.

Limited procurement in Uttar Pradesh despite the highest number of procurement centres

Uttar Pradesh is the largest wheat producing state in the country but only 7% farmers in the state avail the MSP.

In Punjab, more than 80% of farmers avail the MSP though the state has only 3% wheat cultivators of the country.

The Commission for Agricultural Costs and Prices (CACP), an organisation under the Union Agriculture Ministry which recommends the MSP, has claimed in several reports that in order to ensure that the MSP is claimed by farmers and to tackle the problem of prices falling below the MSP in domestic markets, the procurement machinery needs to be strengthened.

The CACP also directed procurement agencies to set up temporary procurement centres in far-flung areas of the country so that the benefits of MSP can reach farmers.

According to documents obtained by The Wire, Uttar Pradesh has the largest number of procurement centres when compared to other states but the procurement is far less.

For the procurement of wheat, a total of 6,685 procurement centres in Uttar Pradesh with 89 centres per district on an average, 204 centres in Rajasthan with 6 centres per district on an average, 3,545 centres in Madhya Pradesh with 68 centres per district on average and 1,836 centres in Punjab with 83 centres per district on average were set up last year.

Despite this, however, only 11.3% of the total crop was procured in Uttar Pradesh. Even though UP had the highest share, that is 31.4%, of the total production in the country. In Punjab, 72.62% of the total harvest was purchased. Haryana had the highest with 79.97% procurement while in Madhya Pradesh only 38.76% harvest was procured.

The president of the All India Kisan Sangharsh Coordination Committee (AIKSCC), VM Singh, said, “The main reason behind the decline in procurement is the nexus between procurement centres and big traders.”

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“The procurement centres are either closed or they make purchases from big traders instead of procuring grains from small farmers,” says Singh. “Taking advantage of the farmers’ lack of awareness regarding the centres as well as prevalence of corruption, the big traders first purchase wheat from farmers at prices much lower than the MSP and then sell it on MSP.”

In 2015-16, there were 20,088 wheat procurement centres in the country. In 2016-17, the number slid down to 18,181 and further declined to 17,596 in 2017-18.

However, an increase in wheat procurement centres was witnessed in the year 2018-19 and the figure reached 19,280. But the next year, there was a steep fall in the number of wheat procurement centres. Declining by 26.31% as compared to 2015-16, the figure fell to 14,838.

Nearly 95% procurement centres are run by state agencies. In 2019-20, FCI had 728 wheat procurement centres, that is, only 5% of the total number of such centres.

The declining number of procurement centres has had a visible impact on farmers. During the rabi procurement season of 2019-20, a total of 3.56 million farmers benefitted from MSP, which is about 0.4 million less than 3.98 million farmers who availed the MSP in 2018-19 even though wheat production has increased considerably during the period.

In 2016-17, the total production of wheat was 98.5 million tonnes. It increased to 103.6 million tonnes in 2018-19. Of this, 34 million tonnes was procured – only 33% of the total produce.

Owing to a dearth of procurement centres, not only are farmers unable to benefit from the MSP, but even the market price of agricultural products remains below the MSP.

According to Agmarknet, a government agency which gives the daily market price of agricultural products, in the rabi procurement season of 2019-20, the market price of wheat remained below the MSP in Uttar Pradesh on 56% of the total number of days between March and June. Similarly, the market price of wheat remained below the MSP 42% of the total number of days in Rajasthan and 27.7% of the days in Madhya Pradesh.

Earlier, the market price of wheat in the rabi procurement season of 2018-19 was 98.9% in Uttar Pradesh and 84.1% in Rajasthan. Both the states account for 41% of the total wheat production in the country.

Translated from Hindi by Naushin Rehman. You can read the Hindi original here.