After Farmers Protest New Laws, Govt. Buys More Paddy Rice

The government’s new season paddy rice purchases from local farmers rose 21% by the end of October, as it tried to allay farmers’ concerns that new agricultural laws mean the federal government will stop buying food grains at guaranteed prices.

India recently approved reforms of its agriculture sector that will allow farmers to sell to institutional buyers and big retailers such as Walmart, but farmers have protested, saying the new legislation could pave the way for the government to stop buying grain at guaranteed prices, leaving farmers at the mercy of private buyers.

Government agencies bought 20.46 million tonnes of paddy rice between the start of the season in the last week of September and the end of October, compared to 16.89 million tonnes during the same period a year earlier, the Department of Food and Public Distribution said on Monday.

Higher purchases will keep paddy rice prices above the minimum support price set by the government, even as the country is set to harvest a record crop, but will put pressure on the finances of the government-backed buyer Food Corporation of India (FCI).

Out of the 20.46 million tonnes bought by the agencies, most it, or 14.28 million tonnes, was purchased from Punjab, the department said. Punjab is the epicentre of protests against the new agricultural laws.

Prime Minister Narendra Modi’s government insists the new rules give farmers the option to sell their produce to private buyers while it would still purchase staples such as rice and wheat at guaranteed prices.

But such assurances have failed to mollify millions of farmers who make up an influential voting bloc in states such as Punjab and Haryana.

Higher government buying is good as it would keep paddy rice prices above the floor price as it limits supplies available for private players, said B.V. Krishna Rao, president of the Rice Exporters’ Association.

“Export demand is good for Indian rice. We are set to export a record amount of rice this year,” he said.