The production of Boro rice this year has surpassed all past records. The plentiful production is a piece of welcome news for the policymakers. But it has in a way brought miseries to millions of farmers and others involved in its processing and marketing. The prices of paddy have come down to such a low level that farmers are reluctant to dispose of their stock. Apparently, they have decided to wait for some more time with the hope of a turnaround in the price situation. But the hope of better price could prove to be elusive.
In the meanwhile, the small and marginal farmers who cannot afford to hold on to their stocks have already become victims of the falling prices of paddy. They have disposed of a large part of their small stocks to meet other necessities and repay the money they had borrowed to finance the cost of production of Boro rice. Such an unpalatable experience, however, is nothing new. On a number of occasions in the recent past, they had to sell their produce at prices that were well below the cost of production.
The import of a substantial volume of rice by the private sector traders at cheap prices from neighbouring India is largely blamed for the slump in paddy prices during the peak harvest time of Boro rice this year.
The government food silos in India are usually required to sell off old food stocks after every three years. The silos dispose of mainly the poor quality stocks at cheaper rates.
The inflow of a large quantity of rice procured at cheaper prices in recent months has left an impact on the overall rice price situation. Aware of the possible impact of the supply glut of rice on local rice harvests, the government started actively considering the withdrawal of the duty exemption on rice and imposition of duty afresh.
But for reasons best known to the decision makers, it took a long time to levy duty on rice import. The delay in decision making had allowed enough time to the traders to continue their import of rice at cheaper rates. By the time the government decided to withdraw the tax exemption facility, the storages of the private importers were filled up with imported rice. So, they don't have any appetite for the locally produced coarse variety of rice, which has led to the slump in paddy prices at major paddy procurement centres.
Reports coming from these centres provide a dismal picture. The current price level of paddy, on an average, is equivalent to 60 to 70 per cent of the cost of production of the same at the growers' level. So, the farmers find no incentive to bring their produce to the major rural procurement centres. Thus, the reduced supply of paddy has resulted in the slowdown in activities in the procurement centres and rice milling facilities.
Many rice growers are now pinning their hopes on the government's procurement drive that started from May 01 last and will end on August 31. But the rice producers can hardly make use of the government procurement drive mainly because the government is more interested in the procurement of rice, not paddy. This season, the directorate of food will procure only 100,000 metric tonnes of paddy as against the procurement target of 935,000 tonnes of rice. The directorate usually buys rice from the rice millers. So, the farmers have very limited scope to benefit from the official procurement drive.
Moreover, irregularities, financial or otherwise, are rampant in the government's food procurement programmes. The rice importers or exporters, it is alleged, get information from officials concerned as soon as any move is initiated with regard to imposition of duty, procurement prices, etc. The rush of private importers for importing rice in large quantities could also be linked to the leaking of information about the imposition of duty on rice import.
The quality of the rice procured by the food officials at the field level remains a concern. It is alleged that millers, in collusion with food officials, supply poor quality rice to the food department's silos. The possibility of supplying the rice imported at cheaper prices from India to the government under the ongoing procurement drive cannot be ruled out. Anything is possible in the government's procurement of goods and services in this country. One can cite lots of stories about such irregularities.
The government leaders speak about the achievement of the country in food production with great satisfaction. But they should find ways to keep the growers of the main staple happy by ensuring fair prices of their produce. Otherwise, if this kind of distortion in price continues, the feeling of satisfaction at bountiful production may not last long.
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