How lack of MSP driving traders to smuggle paddy into Punjab, Haryana

The vigil is not for nabbing infiltrators coming from across the international borders. This time the surveillance is along the Punjab borders with its neighbouring states for a different reason. Nearly 150 teams involving 1,500 officials of the civil supplies department are keeping a close watch at the borders ensuring that trucks carrying paddy from other States do not enter Punjab.

This is not the first year that such tight scrutiny is being maintained at the borders. For the past few years, both Punjab and Haryana have maintained strict vigil at its borders to ensure that no trucks, tractor-trollies and bullock carts laden with paddy (and also wheat during the wheat procurement season) are allowed entry. Haryana also ensures that unscrupulous traders do not bring bajra from neighbouring Rajasthan.

Deceitful traders from as far as West Bengal, Bihar and Uttar Pradesh have found it profitable to purchase paddy from farmers at prices as low as Rs900 to Rs1,100 per quintal, and transport it all the way to Punjab and Haryana where it is sold at the Minimum Support Price (MSP) of Rs 1,960 per quintal at the mandis. Despite the risk, and the additional transportation cost, traders still find it economical to sell it at MSP at such a far distance. In lot many cases, even when unscrupulous traders manage to sneak in, Punjab and Haryana have raided the premises where these stocks are offloaded, seized the trucks, and filed FIRs against the traders.

A few days after procurement operations began this year, Punjab seized huge stocks of paddy that had been brought from Bihar. As per media reports, while about 4,000 quintals of paddy were recovered from a godown in Taran Taran in Amritsar district, and another 12,000 bags of paddy were seized in Kapurthala. A few days back, trucks carrying 400 quintals of paddy coming in illegally from West Bengal were apprehended. In another incident, 350 quintal of paddy from Uttar Pradesh was seized in Patiala district.

Last year, in just one incident, Punjab had confiscated over 11,000 quintals of paddy at the Punjab-Haryana border in Patiala. This consignment was coming in from Bihar and UP. Similarly, media reported of numerous other such seizures. In April this year, soon after the wheat procurement season had begun, trucks carrying 25,000 bags of wheat, containing 50 kg each, were impounded in Bathinda district. For years, more so since 2017, wheat and paddy has been illegally transported to Punjab and Haryana. In an interesting analysis, Indian Express has worked out that huge quantities of paddy is transported from other States, mainly from Bihar and UP, and is marketed in Punjab, adding to the higher figures of paddy procurement from the food bowl.

Comparing production and procurement statistics, and looking at the yields recorded in crop-cutting experiments and the possible marketable surplus it can generate, the newspaper has estimated that for three consecutive years, beginning 2017-18, Punjab has procured more than 10-lakh tonnes of additional quantity of paddy every year. Accordingly, it procured an additional 15.42 lakh tonnes in 2017-18; an extra 10.20 lakh tonnes in 2018-19 and another 11.82 lakh tonnes in 2019-20. These staggering figures of huge quantities of paddy being from Bihar, West Bengal and UP to Punjab clearly show how defective the marketing system is. It clearly reflects on the failure of the State governments to provide adequate marketing infrastructure as well as for the Centre to provide farmers with remunerative prices across the country, and not keep it confined to some pockets alone. Otherwise there is no reason why traders would be willing to take the risk of illegally transporting paddy (and wheat) to Punjab and Haryana where they can get a higher price.

At the same time, it also brings out clearly the primary reason why eastern UP, Bihar and West Bengal, which have roughly 70 to 80 per cent of the rural population engaged in agriculture, remains steeped in poverty. But instead of addressing the fundamental flaws in marketing and procurement operations, the Centre appears keener on finding ways to reduce paddy procurement from Punjab. It reminds me of a film I had seen when I was a child. "Don't raise the bridge, lower the river" was its tile. And this is exactly the probable solution the government seems to be working towards, and believes will put an end to paddy smuggling. It has decided to cap per unit paddy procurement at 34 quintals per hectare. At the same time, it is also discussing the possibility of restricting paddy procurement at 170-lakh tonnes, with Punjab government insisting on 190-lakh tonnes. The problem is not of paddy smuggling.

The bigger problem that the policy maker refuse to see is the denial of the rightful price, by way of an assured MSP, to farmers in eastern UP, Bihar and West Bengal and for that matter across the country. For instance in Bihar, less than 2 per cent of wheat and 20 per cent of paddy is procured from farmers at the MSP announced. The remaining quantity is sold by farmers at a distress price ranging from Rs 900 to Rs 1,200 per quintal at the maximum. Compare it with Punjab, where more than 95 per cent of paddy is procured by the State agencies on behalf of the FCI for which the RBI has extended a cash credit limit of Rs 35,700-crore. Punjab has strengthened its network of 3,000 mandis and purchase centres to procure the paddy marketable surplus this year.

Even though there are lingering questions whether MSP provides farmers with profitable price, the fact remains that in Punjab and Haryana farmers at least get an assured price. It is because farmers in other States don't get an assured price, and also do not have an assured marketing network that they have to sell the produce at a distress price. Therefore, instead of making all-out efforts to stop smuggling of paddy into Punjab, the effort should be to replicate Punjab's time-tested agricultural marketing infrastructure and its effective price delivery mechanism in other States. The higher the price, the higher will be the average farm household income. Therein also lies the way to lift millions out of poverty.

(The author is a noted food policy analyst and an expert on issues related to the agriculture sector. He writes on food, agriculture and hunger)