Proposed cut in levy rice procurement comes as a dampner

While State officials are concerned over the impact on the PDS here, millers are keeping their fingers crossed as any move to reduce levy procurement will infuse volatility in the pricing pattern.

Andhra Pradesh is one of the largest contributors of levy rice to the Central pool as also the primary source of boiled rice supplied through the public distribution system in neighbouring States such as Kerala. File photo: AVG Prasad

The Union Food Ministry’s proposed move to cut down the procurement of levy rice from 75 per cent to 25 per cent has come as a shocker for the State government as well as the rice millers.

Andhra Pradesh is one of the largest contributors of levy rice to the Central pool as also the primary source of boiled rice supplied through the public distribution system in neighbouring States such as Kerala. While senior Civil Supplies officials are concerned over the impact the cut in levy will have on the PDS system here, the millers on their part are keeping their fingers crossed as any step towards cut in levy procurement will infuse volatility in the pricing pattern.

The quantum of procurement of levy rice, mostly raw rice for the PDS, from millers involves an estimated Rs. 16,000 crore with millers as well as farmers getting at least the minimum support price, if not remunerative prices, for their produce. The State has contributed 80 lakh tonne under levy last season of which close to 45 lakh tonne were supplied to the PDS system while another 30 lakh tonne of boiled rice went to Tamil Nadu and Kerala.

Cutting down the levy by two-thirds would, in turn, result in an equal drop in the quantum hitting the farmers and millers adversely.

“Small and marginal farmers with no holdings will suffer the most as their margins will be severely hit,” a senior official told The Hindu .

The cut in levy procurement by one third from 75 per cent to 25 per cent will certainly lead to cartelisation and formation of syndicates by millers who will in turn decide the procurement price. “How can there be a control on price pattern when millers are permitted to sell 75 per cent of the commodity in open market?”, he asked.

The development is unlikely to have any major impact on the price of finer varieties like sona masuri. But the small income groups and people dependent on the PDS will bear the brunt as a major chunk of the levy rice comprises coarse varieties. “Finer varieties are once a year crops whereas the farmers opt for coarse varieties as they can be grown twice a year if the conditions are favourable,” the official said.

Rice millers on their part remained tight-lipped as they too appeared unprepared for the cut as reduction in levy will take with it the assurance of procurement by the government agencies.

“This will come into effect from October 1 when the kharif marketing season starts. The government should relax the movement of rice within and outside the country if it is indeed firm on cutting down the levy,” Rice Millers Association president A. Lakshminarayana said. Millers will not be in a position to purchase paddy/rice from growers if the existing restrictions on its movement are not removed. The cut in levy would have twin effects of glut in market affecting the prices of rice and slowdown in procurement by millers who will first need to explore ways of disposing of the commodity as and when they make purchases from the growers.