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Procurement

Policy and System

1. The Central Government extends price support to wheat and paddy through FCI and State Agencies. Procurement at MSP is open ended i.e., whatever foodgrains are offered by the farmers ,within the stipulated procurement period and which conforms to the quality specifications prescribed by Government of India, are purchased at MSP (and bonus/incentive ,if any)  by the Government agencies including FCI for central Pool. Some States also declare State bonus on wheat and paddy over and above MSP.

Government agencies undertake MSP operation at mandis/ temporary purchase centres/aggregation points. Location and number of purchase centres to be opened are decided in consultation with /by the State governments.

 2. Systems of procurement:

2.1 Wheat - FCI undertakes direct procurement in non-DCP states. In the major procuring states like Punjab and Haryana, wheat is mainly procured by state agencies and they preserve the stocks under their custody for which carry –over charges are paid to them. FCI takes over the stocks for dispatch to consuming states as per requirement /movement plan. Payments are made to state govt. /agencies as per cost sheets issued by Governemnt of India after taking over the stocks. In the states like UP and Rajasthan, the wheat procured by state agencies is immediately taken over by FCI for storage /dispatch.

In DCP state like M.P, wheat is procured by the State agencies and only the surplus wheat stocks over & above the State’s requirement under TPDS/NSFA and Other Welfare Schemes are taken over by FCI for dispatch to other consuming regions.

 2.2 Rice is procured through two routes –

a) Custom Milled (CMR) and
b) Levy rice.

CMR is manufactured by milling paddy procured by State govt. /State agencies and FCI. In the states like A.P, Punjab, Haryana, Chhattisgarh, Odisha, MP, Tamilnadu, UP & Bihar paddy is mainly procured by State government /State agencies and the resultant rice is delivered to State Government and FCI by getting the paddy milled from rice millers.

In the states like Andhra Pradesh, Telangana, Uttrakhand, UP and West Bengal, rice is also procured in Central Pool through levy route. The rice millers deliver fix portion of their production at the %age imposed under State levy orders issued by the concerned State government with concurrence of Government of India, at notified levy prices fixed by the Government of India However, Government of India has decided to discontinue levy system of rice procurement w.e.f. 1.10.2015

Major responsibility of procurement of wheat and paddy is borne by the State agencies whereas FCI procures almost 70% of total rice procured for Central Pool.  

2.3 Coarse grains- Coarse grains are being procured by the State governments for central pool.  

3. In major wheat and paddy procuring States like Punjab, Haryana & some parts Rajasthan procurement from farmers is undertaken by the FCI/State Agencies through Arhatiyas as per APMC Acts of the concerned State for which commission @ 2.5% of MSP is paid in the States of Punjab & Haryana and @2% in Rajasthan. In other States like MP, Chhattisgarh, UP, Uttrakhand, AP, Tamilnadu, Bihar, Jharkhand, Odisha, West Bengal procurement is made through Co-operative societies and they are paid fixed remunerations at following rates-

Wheat: Rs 27.00 /Qtl

Paddy (Grade ‘A’):  Rs 32/Qtl

Paddy (Common) : Rs 31.25/Qtl

4.Centralized and Decentralized procurement systems:

4.1 Centralized (Non-DCP) procurement system:

 Under centralized procurement system, the procurement of foodgrains in Central Pool are undertaken either by FCI directly or State Govt. agencies procures the foodgrains and handover the stocks to FCI for storage and subsequent issue against Government of India allocations in the same State or movement of surplus stocks to other States. The cost of the foodgrains procured by State agencies is reimbursed by FCI as per cost-sheets issued by Government of India as soon as the stocks are delivered to FCI.

4.2 Decentralized (DCP) Procurement

 Under DCP system, the State Government of India/its agencies procure, store and distribute (against Government of India’s allocation for TPDS & OWS) rice /wheat/coarse grains within the state. The excess stocks (Rice & wheat) procured by the State /its agencies are handed over to FCI in Central Pool. The expenditure incurred by the State Government on procurement, storage and distribution of DCP stocks are reimbursed by Government of India on the laid down principles. The expenses such as MSP, arhatiya/society commission, administrative charges, mandi labour charges, transportation charges, custody & maintenance charges, interest charges, gunny cost, milling charges and statutory taxes are reimbursed on actual basis.  The cost of excess stocks handed over to FCI is reimbursed by FCI to the State Government/agencies as per Government of India costs sheet.

As on date the following States are procuring rice/wheat under DCP system. 

RICE

WHEAT

 

S.No.

State

W.e.f

State

W.e.f

1.

Andaman & Nicobar

2003-04

Bihar

2014-15

2.

Andhra Pradesh

2012-13

Chhattisgarh

2001-02

3.

Bihar

2013-14

Gujarat

2004-05

4.

Chhattisgarh

2001-02

Madhya Pradesh

1999-2000

5.

Karnataka

2002-03

Rajasthan(1 revenue district Alwar only)

2013-14

6.

Kerala

2004-05

Uttarakhand

2003-04

7.

Madhya Pradesh

2007-08

West Bengal

2010-11

8.

Odisha

2003-04

Punjab (to the extent of its requirement of 8.69 LMT)

2014-15

9.

Tamilnadu

2002-03

 

 

10.

Telangana

2013-14

 

 

10.

Uttarakhand

2002-03

 

 

11.

West Bengal

1997-98

 

 

Jharakhand (1 District only) and Maharasthra is a DCP state from KMS 2016-17