Sources quoted Food Minister as saying that they are going to end the levy rice procurement system from the beginning of 2015-16 (October-September) marketing season to provided maximum benefits to the farmers.

Under Levy Rice Procurement System, millers purchase paddy from farmers at minimum support price (MSP) and in turn, the respective state governments’ purchases milled rice from millers according to their Public Distribution System needs. Of total rice production in the state, the state government purchases 30-75% of rice.

In the year 2014, the state governments have capped levy rice procurement from millers at 25% for 2014-15 procurement seasons.

Usually about 5 million tons of rice is purchased from the rice millers through levy procurement system annually and the purchased rice is directly handed over to the Public distribution Operators. Millers are also happy with the system as they used their installed capacities optimally.

The main purpose to start the levy rice procurement system was to bridge the volume gap with government procurement agencies. However the Food minister was quoted as saying that the system is not fulfilling the desired aim due to improper supervision and also the millers are not paying MSP to farmers are selling high quality rice in open market so they decided to abolish the system from the beginning of 2015-16 (October-September) marketing season to provided maximum benefits to the farmers.

With the abolition of this system, the government will make it compulsory for all the government procuring agencies along with the FCI to step up their procurement operations as well as well as entirely adopt Custom milled rice under which the government will directly purchase the paddy from farmers are get it milled by the registered millers to ensure payments of MSP to farmers and rectify the irregularities in the levy procurement system.

Major rice producing nations like Punjab, Haryana had abolished the system two years back but this system prevails in Uttar Pradesh, Uttrakhand, Andhra Pradesh, Telangana and West Bengal.

The decision is welcomed by the market expertise. “It is a right step in right direction, moving away from controlled system to somewhat free market.

Former Chairman of Commission of Agricultural Costs and Prices (CACP) was quoted as saying that the rice millers are free to sell their rice in rice, which ultimately help the farmers to get better prices.

Indian government target to purchase around 30.05 million tons of rice during 2014-15 Khariff season down by 12% from last year target of 34.3 million tons.