Levy rice system on its way out in Karnataka

Govt. plans to buy paddy from farmers at market rates

The government has proposed an amendment to the Karnataka Rice Milling Regulation and Rice and Paddy Procurement (Levy) Order, 1999, to slowly move away from the regimen of procuring rice from millers as levy and towards the system of market procurement.

The amendment, sent to the Centre for concurrence, will give the government the flexibility to annually assess the need to collect levy rice and the quantum needed, said Harsh Gupta, Commissioner, Food and Civil Supplies. Significantly, it will also allow the government not to collect levy rice and instead buy paddy directly from farmers at market rates.

Mill point levy system

Under the present mill point levy system, a mill owner buys paddy from farmers and sells a fixed percentage of the hulled rice at a fixed price to the government. The changed system will entail the government buying paddy at market rates from the famers directly and getting it hulled at the mills at a rate fixed by the government, on the lines of the practice in Chhattisgarh.

“It is felt that levy is outdated as an instrument of grain procurement when we are moving towards free market and it is better to allow the millers to function on a business model,” Mr. Gupta said. He said this was in tune with the Centre’s direction to States to slowly move away from the levy system.

In Karnataka, mill point levy system has been resisted by millers who argue that the “super fine rice” (mostly Sona Masuri variety) grown here cannot be procured, hulled and sold to the government at the levy rate. Karnataka procures only a fraction of the fixed target year after year. “The amendment will remove impracticality of the earlier policy,” he said. This is in contrast to Andhra Pradesh where cheaper varieties of rice too are grown and millers are happy with the levy regime because it gives assured business.

Mr. Gupta argued that the proposed amendment in Karnataka would be beneficial to not only millers but also farmers.

“When the government is the direct buyer, there is an assurance of minimum support price being paid,” he said.