But have the high retail prices in any way benefited the farmers? How has their lot improved from the spiralling food inflation? Business Standard takes stock of the situation in a three-part series.
Prasanta Kumar Behura of Aradiapada village in Orissa's Cuttack district harvested 90 quintals of paddy from his fields last December. By February, he had sold more than half of it (about 52 quintals) to private traders at Rs 540 per quintal. The price he got was Rs 105 less than the minimum support price (MSP) of Rs 645 set by the Centre for the common variety of paddy.
The government has put a ban on export of non-basmati rice in a bid to cool rising rice prices, which have escalated 60-80 per cent in the last one year. Consumed by rich and poor alike, the political fallout of high rice prices was not lost on the government, which moved fast and put a ban on export of the common variety grown by the vast majority of farmers in the country.
Clearly, farmers like Behura have gained little in the bargain. If at all, the export ban may further depress the prices farmers in the North get once their crop is ready for harvest in October and November.
Behura complains that procurement of paddy in the area by the agencies of the central government is non-existent. All over the country, the government prefers to buy rice directly from rice millers than buy paddy from farmers and get it processed in mills. Millers in all states are required to set aside a part of their output for the government.
Though the Centre has procured 28.2 per cent of the 95.68 million tonnes (mt) rice produced in the country in 2007-08 (up from 26.7 per cent of 93.35 mt in 2006-07), procurement of paddy remains low. Punjab accounts for maximum paddy procurement (35.4 per cent) by government agencies, while in states like Uttar Pradesh and Orissa, the figures are mere 11.5 per cent and 6.3 per cent, respectively, according to the Economic Survey 2006-07.
"The paddy farmer is yet to be seen as a consumer deserving an income for the work he does," says MS Swaminathan, agricultural scientist and a Rajya Sabha member, adding: "What the farmer gets is no comparison to the market price."
The Commission for Agricultural Costs and Prices (CACP) recently recommended Rs 1,000 MSP for paddy. The proposal is awaiting Cabinet approval. The huge increase, if approved, would be something that has not happened to paddy prices for years, reflecting the neglect suffered by the country's paddy farmers for more than a decade.
Says former CACP chairperson T Haque, who has authored the latest report on prices: "The gap between the MSP and market price of paddy is too much as it (the MSP) was not raised for several years in this decade. If it was raised at all, it was by a few rupees now and then."
The MSP of paddy went up steadily in the 1990s from Rs 230 in 1991 to Rs 510 in 2001. After that, it seems to have hit a speed breaker. It rose to only Rs 645 by 2008.
The gloom is palpable elsewhere in the country too. Lalit Kumar Singh of Arjunpur village in Balrampur district of Uttar Pradesh is resigned to selling paddy for Rs 100 below the support price of Rs 645 this harvest season.
He says high prices in the open market won't help him as the agents pay less than the support price. In Uttar Pradesh, where total paddy production was 11.7 mt in 2006-07, the government procurement was only 2.2 mt. Most of the paddy in the state is procured by middlemen, who then sell at government procurement centres. This is true of most paddy-growing areas in the country.
Meanwhile, states and farmers are seeking implementation of the MSP recommended by the CACP. Says agricultural economist Devinder Sharma: "The CACP's recommendations are usually accepted and this one is the most eagerly awaited as it comes after a long decade of stagnation and now such inflation."
Says Nirbhay Singh Dhillon, a farmer in Sangrur district of Punjab: "Our input cost has gone up manifold in the recent past but the MSP has not been revised. This is pushing us into debts."
Additonal reporting by Bishnu Das, Virendra Singh Rawat & Vijay Roy
