Explained: How government procures wheat

What is the News?

The procurement of wheat is underway in several states.

Why does the Government procure Wheat?

The Government policy of procurement of Food grains such as rice, wheat, and coarse grains has broad objectives of ensuring Minimum Support Price(MSP) to the farmers and availability of food grains to the weaker sections at affordable prices. 

It also ensures effective market intervention thereby keeping the prices under check and also adding to the overall food security of the country. 

How is the procurement of wheat carried out?

The Food Corporation of India(FCI) along with State Government Agencies(SGAs) procures wheat. The FCI’s wheat procurement system can be decentralized (DCP) or centralized (non-DCP).

Under the centralized system, in states like Punjab and Haryana, FCI/state agencies procure wheat from farmers through arhtiyas (commission agents) as per the state APMC Act. In other states, wheat (or paddy) is procured directly from the farmers by FCI or SGAs.

Under the decentralized procurement system, state governments or their agencies procure, store, and distribute — against the Government of India’s allocation for the targeted public distribution system and other welfare schemes(OWS).

What is the price the government pays?

The government buys wheat at the MSP which it declares before the sowing of the crop every year on the recommendation of the Commission for Agricultural Cost and Prices (CACP). 

MSPs are currently applicable on 23 farm commodities, including wheat and rice. However, there is no statutory backing for MSPs or any law mandating their implementation. 

Source: This post is based on the article “Explained: How government procures wheat” published in Indian Express on 22nd April 2022.