The Government policy of procurement of paddy has broad objectives of ensuring MSP to the farmers and availability of food to the weaker sections at affordable prices. It also ensures effective market intervention thereby keeping the prices under check, also adding to the overall food security of the country.

During the Kharif Marketing Season (KMS) 2022-23, (upto 22.05.2023), the production of rice is 1308.37 LMTs (as per second advance estimate), procurement estimate of rice is 626.06 LMTs and quantity of rice procured is 520.63 LMTs. In KMS 2022-23 (upto 22.05.2023), this has led to MSP payment of Rs.159,659.59 Crores and benefited 1,12,96,159 farmers.

FCI, the nodal central agency of Government of India, along with other State Agencies undertakes procurement of paddy under price support scheme. The procurement operations are majorly carried out by State Govts and its agencies.

Before the harvest, during each Rabi / Kharif Crop season, the Government of India declares the minimum support prices (MSP) for procurement on the basis of the recommendation of the Commission of Agricultural Costs and Prices (CACP) which along with other factors, takes into consideration the cost of various agricultural inputs and the reasonable margin for the farmers for their produce. MSP (Minimum Support Price) operations are given wide publicity through pamphlets, banners, sign boards, radio, TV and advertisements through print & electronic media.

Farmers are made aware of  the  quality  specifications  and  purchase system etc. to  facilitate  the  farmers  to  bring  their  produce  conforming to the  specifications.  Procurement centres are opened by respective State Govt.  Agencies/FCI taking into account the production, marketable surplus, convenience of farmers and availability of other logistics / infrastructure such as storage and transportation etc., large number of temporary purchase centres in addition to the  existing Mandis and depots/godowns are also established at key points, for the convenience of the farmers.

To further strengthen the system such that the farmers directly get the MSP announced by Government of India, “One Nation, One MSP through DBT” implemented across the country from RMS 2021-22 onwards. Payment of MSP has been ensured directly into farmers' accounts. DBT eliminated fictitious farmers and reduced the diversion and duplication of payment as payment is being made directly to farmer's bank account. DBT of MSP has brought in responsibility, transparency and probity.

FCI and most of the State Governments have developed their  own Online Procurement System which ushers in transparency and convenience to the farmers through proper registration and monitoring of actual procurement. Through an e-procurement module deployed by procuring Agencies, farmers get latest/updated information regarding MSP declared, nearest purchase centre, date of procurement etc. This not only has reduced the waiting period for delivery of stock by the farmers but also enables the farmer to deliver stock as per his convenience in the nearest mandi.

Paddy brought to the Purchase centres which are within the prescribed specifications, are purchased at the fixed Minimum Support Price. If the farmers get prices better than the support price from other buyers such as traders / millers etc., they are free to sell their produce to them. FCI and the State Government/agencies ensure that the farmers are not compelled to sell their produce below support price.

  Systems of procurement:

Paddy is procured under Centralized and Decentralized procurement systems.

  Centralized (Non-DCP) procurement system:

Under the centralized procurement system, the procurement of food grains in Central Pool is undertaken either by FCI directly or by State Govt. Agencies (SGA). Quantity procured by SGAs is handed over to FCI for storage and subsequent issue against GOI allocations in the same State or movement of surplus stocks to other States. The cost of the food grains procured by State agencies is reimbursed by FCI as per Provisional per cost-sheet issued by GOI as soon as the stocks are delivered to FCI.

  Decentralized (DCP) Procurement

The scheme of Decentralized Procurement of food  grains  was introduced by the Government in 1997-98 with a view to enhancing the efficiency of procurement and PDS and encouraging local procurement to the maximum extent thereby extending the benefits of MSP to local farmers as well as to save on transit costs. This also enables procurement of food grains more suited to the local taste. Under this scheme, the State Government itself undertakes direct purchase of paddy/rice and wheat and also stores and distributes these food grains under NFSA and other welfare schemes. The Central Government undertakes to meet the entire expenditure incurred by the State Governments on the procurement operations as per the approved costing. The Central Government also monitors the quality of  food grains procured under the scheme and reviews the arrangements made to ensure that the procurement operations are carried smoothly. The names of states which have signed the MOU with Government of India to adopt DCP mode for procurement of rice is as under:

Minimum Support Prices:

The Minimum Support Price (MSP) for paddy is fixed by the Department of Agriculture & Cooperation, GOI on the recommendations of  the CACP. MSP of paddy during KMS 2018-19 to KMS 2022-23 is as under:

(Rs. per quintal)

Quantity of Paddy (in terms of rice) Procured, MSP payment and no. of farmers benefited during previous years are as under:

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