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LATEST NEWS UPDATES | Distress among Paddy Farmers in a Village of Azamgarh (Uttar Pradesh): Pre & Post Demonetisation -Santosh Verma

Distress among Paddy Farmers in a Village of Azamgarh (Uttar Pradesh): Pre & Post Demonetisation -Santosh Verma

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published Published on Dec 28, 2016   modified Modified on Dec 29, 2016
-Vikalp

The paddy cropping and harvesting season has been concluded and the Rabi crops (mainly wheat) is seeded into the vast agricultural plains of Eastern Uttar Pradesh. The region is known to be highly dependent upon agriculture for livelihood and food security, but it is also known as one of the economically backward-regions of the country. The persistent negligence by the government to develop a mechanised crop procurement system (through Food Corporation of India or State Government Authorized Agencies (SGAs)) and the recent demonetization of high-value currency notes have put the struggling agricultural communities of this region into a deep crisis. In the absence of procurement agencies, the farmers are forced to sell their surplus paddy to the local traders or in the open markets (nearby shops) at lower prices than the Minimum Support Price (MSP) and the demonetization has led to further suppress the open market prices of the paddy. This article deliberates upon cause and relations of this growing crisis among the paddy farmers due to the near absence of Government procurement agencies (both FCI and SGAs) at a time when ill-effects of demonetizations have led to a severe cash crunch leading to disruption in economic activities in the last few weeks.

Current Procurement Mechanism in Eastern Uttar Pradesh

Since 2015, the Department of Food & Public Distribution of the Government of India has started to short-list private parties based on e-tenders to purchase paddy from the farmers where FCI and other government procurement agencies have less reach. These private parties are given the task of purchase, storing, packaging and transportation of paddy from these regions including Eastern Uttar Pradesh. These parties are getting the Minimum Support Price (MSP) fixed by the Government in addition to the statutory charges and incidentals quoted in the tender document upon production of proof of payment.

The procurement of paddy used to take place in two ways. First, is by way of  custom milling under which the FCI, the SGAs and the cooperative societies directly purchase paddy from the Mandis. The second is the process of levy rice where private parties procure paddy from the farmers and process it to supply certain minimum fixed quantity to the government agencies (FCI) under the Essential Commodity Act of 1955. But from October 2015, the levy rice system has been abolished by the Government which meant that there would not be any compulsory selling of paddy to the Central/State procurement agencies under the Act.

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Vikalp, 27 December, 2016, http://www.vikalp.ind.in/2016/12/distress-among-paddy-farmers-in-village.html


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