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minimum support price (MSP)


India West Bengal State Lacks Funds to Procure Paddy Rice; Bihar State Announces Bonus on MSP of Paddy Rice


  Jan 24, 2014

India’s eastern state of West Bengal is planning to use private rice millers to procure paddy rice from farmers due to lack of funds with the government to procure paddy rice directly.

Rice production in West BengaI was estimated to fall to around 13 million tons this year due to adverse weather conditions, but the state produced around 15.3 million tons. Meanwhile, government officials say that paddy rice procurement by government agencies stands at around 88,058 tons, which is just about 7% of the targeted 1.3 million tons. The government has also discontinued the Rs. 70 per quintal (about $11 per ton) bonus on paddy support price in 2012 due to lack of funds.

Higher production and lower procurement have led to decline in paddy rice prices. Local sources say that farmers are forced to sell their paddy rice at around Rs. 1,280 per quintal (about $ 207 per ton) to private traders, which is down about 3% from the minimum government support price (MSP) of Rs. 1,310 per quintal (about $212 per ton). The West Bengal government says that early procurement of levy rice by millers will strengthen paddy prices and encourage farmers to re-invest in the boro season rice crop which begins in January-end.

However, local sources say that the move by the government is to appease farmers ahead of general elections in April – May 2014. Moreover, there are concerns that rice prices may increase in the state if farmers sell their paddy rice in the neighboring state of Bihar, where the state government has announced a bonus of Rs. 250 per quintal (about $40 per ton).

The West Bengal government usually procures levy rice from millers after March, but wants to complete levy rice procurement before March this year. Under the levy rice policy, millers procure rice from farmers at MSP and government buys the rice from millers later for its welfare programs.

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