As per local reports, the government of India has allowed private traders to procure around one million tons of rice during the 2015-16 Kharif Marketing Season (KMS) in the states of Uttar Pradesh, Bihar, Jharkhand, West Bengal and Assam. It has been indicated that the Indian government is targeting to procure a total of 6.9 million tons of rice from the five states in the on-going procurement season, as quoted by an official of Food Ministry. Further, the decision to involve private players in the rice procurement operations is based on the recommendations of the committee set up to restructure the Food Corporation of India (FCI) operations. The Committee headed by a former Food Minister observed that the government needs to focus on the procurement operations in the five north-eastern states to improve efficiency in transportation, packaging and storage facilities in those states.
In this context, it was also revealed that these five states contribute to over 40% of India’s rice production by the FCI and does not have a strong procurement mechanism in these states. Under this situation; often farmers are forced to go for a distress sale. In order to avoid such a situation and to help farmers to receive the minimum support price (MSP), it has been decided to involve private players in the rice procurement process too. Furthermore, the FCI is in the process of shortlisting companies for procurement in these five states. The government of India is also planning to procure around 30 million tons of rice in the KMS 2015-16, including around 2.7 million tons from Uttar Pradesh, 2 million tons from Bihar, 1.8 million tons from west Bengal, 300,000 tons from Jharkhand and 50,000 tons from Assam. Further, it was narrated that the MSP for common and grade A varieties of paddy is fixed at Rs.1,410 (around $211 per ton) and Rs.1,450 (around $217 per ton) per quintal respectively for the year 2015-16 KMS.