Maize procurement to cost government dearly

File photo of a farmer drying his maize harvest at his farm at Elkathurthy in Warangal.

File photo of a farmer drying his maize harvest at his farm at Elkathurthy in Warangal.   | Photo Credit: M_Murali

With no support from Centre, State has to bear the burden

For the first time since the Centre withdrew funding for maize unless the States included the item in the public distribution system, the Telangana government is faced with the prospect of having to spend a huge amount on its procurement from farmers this year.

It was from 2014-15, the first year of formation of Telangana, that the Centre continued to fix minimum support price for maize but left procurement to States under MSP operations if they did not supply the produce under PDS. The net burden to Telangana government in that year in both kharif and rabi on a total purchase of 28.78 lakh quintals of maize and selling the same in open market was ₹102 crore.

Sources said the years 2015-16 and 2016-17 did not result in loss to the State government as maize was mostly sold by farmers at market yards at rates higher than the MSP. However, whatever produce that the government purchased in those years at MSP when the rates dropped was disposed of at a break even level.

In this context, the year 2017-18 turned crucial for the State government as there was a significant increase in output which went up to 30.59 lakh quintals in kharif alone and the likelihood of the arrivals nearing 50 lakh quintals by May 31 when the 172 procurement centres will close. The government has given a bank guarantee of ₹ 1,000 crore to Telangana State Cooperative Marketing Federation (MARKFED) to procure the entire quantity at MSP. The agency has spent ₹ 460 crore in procurement of kharif crop at the MSP of ₹ 1,425 a quintal and already made purchases worth ₹ 105 crore in rabi so far.

The government decided to step in in a big way, particularly in rabi, as the market price was below MSP when the arrivals commenced at market yards on April 10. The Joint Collector of Bhadrachalam and the District Marketing Officer of Warangal informed the government that there was also distress sale by farmers in view of glut in market. The production was high mainly in erstwhile Khammam, Warangal and Karimnagar districts. Besides giving bank guarantee, the government decided that it will reimburse the loss suffered by MARKFED.