Little headway on plan to make UP’s MSP system stronger

27.02.2022 23:44

Officials told FE that because of inadequate marketing infrastructure and the state government’s inability to allocate sufficient funds for development of mandi infrastructure, the procurement in UP remains at low levels.

Government procurement of food grains at the Minimum Support Prices (MSPs) continues to be very uneven, despite the efforts being made to extend the reach of the system. MSP benefits to farmers in Uttar Pradesh, one of the largest producers of cereals in the country, have seen marginal improvements in recent years, but is still far below the levels in Punjab, where the system has conventionally been robust. Even in comparison to Madhya Pradesh, Rajasthan and Chhattisgarh, UP’s MSP system has a much narrower reach.

MSP procurement of rice and wheat in Uttar Pradesh in the latest crop seasons was just about 30% and 16% respectively of production, while the same in Punjab stood at even above 100% for rice (implying even parts of grains produced in neighbouring states get sold at Punjab mandis) and close to 80% for wheat respectively (see chart).

According to official state-wise production data available till 2019-20, Punjab and Uttar Pradesh contributed 10% and 13% of rice production of the country respectively while in case of wheat, these states had a share of 16% and 30% respectively. However, Uttar Pradesh contributed only 7.28% of rice and 10.84% of total wheat procurement by the Food Corporation of India, while Punjab’s share in procurement was a significant 21% (rice) and more than 37% (wheat).

The total volume of procurement by FCI and state agencies was 39 MT (wheat) and 60 MT (rice) from the grain surplus states including Punjab, Haryana, Madhya Pradesh, Rajasthan, Chhattisgarh, Odisha, Andhra Pradesh and Telangana in 2020-21.

“The UP government needs to invest in creating mandi infrastructure in the state so that the procurement from the farmers could be stepped up,” an official said. “Because of small landholdings in Uttar Pradesh, marketable surplus of grain is less compared to Punjab. In the absence of robust mandi structure, private purchaser of grain is more active in Uttar Pradesh,” P K Joshi, former director, South Asia, International Food Policy Research Institute, said.

In Punjab, Haryana and other states which contribute significantly to the central pool of grain stocks maintained by FCI, procurement infrastructure is robust and a large portion of marketable surplus of rice and wheat is purchased by the government for allocation towards implementation of National Food Security Act and buffer stock.

As per the manifesto for Uttar Pradesh assembly elections, the ruling BJP has promised to further strengthen the procurement of wheat and paddy at MSP in the next 5 years and said an outlay of Rs 1,000 crore would for made for MSP purchases of crops such as potato, tomato and onion. The Samajwadi Party has offered to pay MSP on all crops and also promised to make all farmers debt-free by 2025.

Uttar Pradesh, which has produced 24 MT of paddy and had set a target of purchasing 7 MT by end of February, has so far been able to purchase only 91.7% of its target in the ongoing kharif marketing season (2021-22). While more than 14 lakh farmers had registered online for the paddy procurement, till now, 10.63 lakh farmers have so far sold their produce at the government purchase centres.