Kerala Assembly: Agriculture Minister calls for State-specific MSP to address high paddy production costs

Kerala Agriculture Minister criticizes Central government's unscientific MSP for paddy, calls for State-specific pricing for farmers' benefit.

A uniform minimum support price (MSP) fixed by the Central government for paddy procurement is unscientific, and it will not benefit the farmers in States where the production cost of paddy is high, Kerala Agriculture Minister P. Prasad has said.

Replying to a calling attention motion in the Kerala Assembly here on Wednesday (January 22, 2025), the Minister said the present MSP for paddy fixed by the Centre would only benefit the farmers in States where the production cost is relatively low. Instead, the Centre should be ready to fix State-specific MSP for paddy procurement based on the production cost involved in various States, said the Minister.

In Kerala, 1 kg of paddy is now procured from farmers at a procurement price of ₹28.32, which includes shares for the Centre and the State. However, paddy production would benefit farmers only if the procurement price is increased to ₹40, Mr. Rajan pointed out.

Currently, the Centre owes an arrear of ₹1,077.67 crore to Kerala in terms of procurement price. The delay in getting the payment from the Centre has caused additional strain on Supplyco (the paddy procurement agency in Kerala). The agency has been providing the procurement price of paddy to farmers as a loan with the support of a consortium of banks. The loan will be repaid by the agency when the Centre releases its share of the procurement price, he said.

Further, the Centre releases its share of procurement price only after the processed rice is distributed to beneficiaries after the due process, causing a major delay in getting the money, said the Minister. The Centre has also to repay an arrear of ₹257.44 crore paid by Supplyco as transportation cost to mills for transporting the procured paddy from the farms to mills, he said.

The Minister added that a report submitted by an expert committee led by retired IAS officer V.K. Baby on improving the paddy procurement system is under consideration by the Assembly sub-committee.

There would be some revamping of the current system based on the recommendation of the report once it is approved by the State, including the intervention of the State to process and distribute the rice through the State machinery, said the Minister.