The Indian government should move to need-based procurement of wheat and rice, restricting its purchases to meet demand for the public distribution system (PDS) and welfare schemes, while allowing the private sector to buy more grains, according to former NITI Aayog member Ramesh Chand. Speaking as guest of honour at the Wheat Products Promotion Society (WPPS) CEO’s conclave “Redefining Wheat Value Chains for a New India”, Chand argued that the minimum support price (MSP) for farmers should be ensured through a price differential payment (DP) made via direct benefit transfer (DBT).
Policy Shift Proposal
According to a report by The Hindu Business Line, Chand stated that the government should come up with an alternative procurement policy that allows the private sector to buy more grains, while still ensuring MSP to farmers through DP. He noted that MSP procurement of foodgrains is affecting value addition, and that the private sector is the biggest contributor to value addition and economic growth. The DP payment can be made through DBT, which is picking up. Chand also pointed out that despite government procurement of wheat and rice, malnutrition in the country remains above 10%.
Chand highlighted that MSP procurement does not encourage higher production growth, citing that rice and wheat have witnessed only 2.5% growth in recent years. In contrast, horticultural crops grew 3.5%, dairy 4.5%, and corn 9%. He added that the agriculture sector has grown 10% in the past few years despite challenges.
Value Addition and Economic Impact
Chand noted that a state like Uttar Pradesh is doing higher value addition to wheat than Punjab or Haryana, which depend on MSP procurement. In the case of paddy, the government incurs a total cost of ₹42 per kg but ends up selling rice for ethanol at less than ₹24/kg.
Manoj Kumar Singh, CEO of the UP State Transformation Commission, announced that an agriculture commodity export complex is coming up near the Jewar airport in Noida on 50 acres. The complex will have testing and treatment facilities for all commodities so that farmers can get more value through exports. Singh called for more value addition to cereals and said Uttar Pradesh will increase wheat processing to 60%, raising its value to ₹40,000–70,000 crore from the current ₹30,000 crore, creating 2.5 lakh additional jobs.
State-Level Initiatives
In his welcome address, Deepak Kumar Bajaj, President of the UP Roller Flour Millers Association (UPRFMA), sought an exemption from mandi fees for wheat procurement by the industry, stating that it was costing the government additional money of ₹350 a quintal in procurement. Ajay Goyal, WPPS President, said artificial intelligence is changing the rules of the game and the industry should adapt.
The two-day conclave, hosted by WPPS along with UPRFMA, discussed issues such as climate, price risk, policy, procurement, trade, storage supply chain, food security, and milling technologies.
Comparative Growth Rates
| Sector | Growth Rate (Recent Years) |
|---|---|
| Rice & Wheat | 2.5% |
| Horticultural Crops | 3.5% |
| Dairy | 4.5% |
| Corn | 9% |
| Agriculture (overall) | 10% |
Source: Ramesh Chand's address at the WPPS CEO’s conclave, as reported by The Hindu Business Line.
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