Buy paddy only from small and marginal farmers, says CACP report

Report also suggests that farmers should grow more oilseeds and pulses

To manage surplus rice stocks in state warehouses, the Commission for Agriculture Costs and Prices (CACP), in its latest price policy report for the 2022-23 kharif season, has advocated paddy procurement from only small and marginal farmers. For the rest of the farmers, the commission said procurement could be limited to the surplus emanating from two hectares.

“This would entail sufficient stocks for maintaining food security and protect the interests of more than 90 per cent of farmers,” the CACP said.

Though advisory in nature, the recommendations, if adhered to, could bring about a change in the manner in which foodgrain is procured and eliminate the need for large subsidies to maintain and procure surplus grain stocks in central warehouses.

It could impact the paddy procurement of many large farmers in Punjab and Haryana, where the average farm land holding is 3.62 hectares and 2.22 hectares, respectively, according to the 2015-16 census, against the national average of 1.08 hectares. Paddy procurement for the Central pool has risen by almost 76 per cent between 2015-16 and 2020-21 from 51.02 million tonnes to 89.56 million tonnes.

The commission for long has been advocating an end to open-ended procurement in the country to manage food stocks and subsidies but, perhaps for the first time, has laid down a path to achieve that.

According to the 2015-16 agricultural census, small and marginal farmers, who owned less than two hectares, accounted for 86 per cent of the landholding in the country. But when it came to operational holdings, small and marginal farmers had a share of around 47 per cent.

In contrast, though the semi-medium, medium, and large farmers accounted for around 14 per cent, they had a share of almost 53 per cent of the operational holding. The census defines an operational holding as land that is used, wholly or partly, for agricultural production.

“The suggestion on capping paddy procurement to just small and marginal farmers looks good but could be difficult to implement because medium and large farmers also need remunerative prices. And, in the case of small and marginal farmers, their marketable surplus of produce is always less. Also it will be difficult to keep big farmers quiet,” S Mahendra Dev, director of the Indira Gandhi Institute for Development Research, and former chairman, CACP, told Business Standard.

The CACP also said cereals procurement should be capped at what is needed for a smooth running of the public distribution scheme, other welfare schemes (OWS) and buffer stocks while farmers should be encouraged to grow less paddy and more oilseeds and pulses.

“The Commission suggests exploring suitable variants of price deficiency payment schemes to compensate cereal farmers for not growing rice and wheat,” the report said.

It also advocated trade policy and price support policy to work in tandem with each other.