Centre to open foodgrain procurement to private players, along with FCI

New Delhi: The Centre will soon invite private players along with Food Corporation of India (FCI) and other state agencies to procure foodgrains for buffer stock, Food Secretary Sudhanshu Pandey said on Monday. He informed that the Food Ministry has already written to all the state governments regarding this. Addressing the 82nd annual general meeting of Roller Flour Millers Federation of India, Pandey said that the Centre has given two clear messages to the state governments regarding procurement of foodgrains.

One is that the Centre would provide up to 2 percent incidental expenses on the procurement undertaken by the state governments. Second, it wants to rope in private sector to buy foodgrains for the central buffer stock with an aim to improve efficiency and reduce the cost of procurement, he said.

Why only FCI and state agencies should procure foodgrains: Minister

"We also want to involve private sector in the procurement process. Why only FCI and state agencies should be procuring?" he asked.

The Secretary said in his recent visit to the International Grains Conference, he found that the private companies were doing procurement operations much more efficiently.

The government has no problem if private player procures foodgrains at less cost and more efficiently than the existing agencies, he said

"We have written to states that the government wants to bring private sector in the procurement process besides FCI and state agencies," he added.

Pandey, on the sidelines of the event, said: "We are going to invite private players to participate in the procurement process from next season."

According to the Secretary, the FCI and state agencies procure about 90 million tonnes annually for the buffer stock, as against the demand of 60 million tonnes.

The foodgrains, mainly rice and wheat, are procured at the Minimum Support Price (MSP) directly from the farmers and distributed under welfare schemes to the poor.

On reducing the cost of procurement, Pandey said the state governments have been told clearly that the Central government will not bear the incidental expense of more than 2 percent.

"We have given signal to them that GoI (Government of India) will not bear more than 2 percent incidental expense. If state governments want to give more, (they) can do so on their own, GoI will not give. With this, the cost of procurement will reduce," he said.

The Secretary pointed out that the procurement cost has risen as some states have imposed taxes and other charges to the tune of 6-8 percent, which the Centre is paying currently.

"This has not only increased the cost of procurement but is also hurting consumers and industries. This message has been given to the states and this will be implemented soon," he said, adding that the matter is at the discussion stage currently.

Pandey also mentioned this decision the Centre does not want to take up abruptly as the states have limited financial resources. However, states need to understand that it cannot be left open-ended.

He also observed that procurement operation in some states are efficient but not so in many states.

The states are aware that they have no option but to improve and strengthen the operational system as it will benefit all stakeholders, he added.

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