- Restrain procurement and sale of government buffer grain stocks in the open market, the Commission for Agricultural Costs and Prices (CACP)’s latest report for the 2020-21 marketing season has recommended.
- The CACP has also recommended that agencies must dispose of the extra stock, even if it is to be used as cattle feed.
- Another drastic recommendation is to discontinue the bonus given by states above the minimum support price (MSP) that has distorted the market and discourages private sale.
- The recommendations are a clear sign that the Government of India is struggling with overflowing food grain warehouses.
- Procurement by government agencies have already broken records with every season.
- The country is also expecting a bumper kharif harvest.
- Parliament recently also passed a bill to remove cereals, pulses, oilseeds, edible oils, onion and potatoes from the list of essential commodities.
- The biggest challenge for the government is not just availability of physical space to store.
- There is also a fear that such a high buffer stock, if released in the market, would lead to a collapse in prices.
- This, in turn, will lead to farmers again losing on fair price for their bumper harvest.
- Rice and wheat stocks are expected to reach a record level of about 92 million tonnes by July 1, 2021, according to the Food Corporation of India’s estimates.
- This is 2.2 times more than the norms.
- The CACP report for 2020-21 kharif marketing season has recommended that the “excess rice stocks should be liquidated through increased allocation under National Food Security Act and Other Welfare Schemes”.
- The report also asked the government to divert old stocks for ethanol production and cattle feed purposes.
- The Union government had decided in April 2019 to sell wheat and rice in the open market via e-auction.
- This was to be done through a scheme called Open Market Sale Scheme and was a step again taken to divert extra stock.
- The policy of open-ended procurement has led to excess grains stocks and adversely affected crop diversification.
