The recent controversy in Tamil Nadu over paddy procurement during the short-term kuruvai season has only strengthened the need for a relook at the procurement system of foodgrains as a whole. In this case — as in many States — the Tamil Nadu Civil Supplies Corporation (TNCSC), which procures paddy on behalf of the Food Corporation of India (FCI), found itself in a spot because of time overruns and charges of corruption. One of the reasons cited is the rise in the coverage of the crop during the season, by about two lakh acres, which was known as early as mid-August. This is because farmers feel it is a safe bet to grow paddy rather than other crops due to minimum assured returns.

Paddy procurement data

The glut is not restricted to Tamil Nadu. Going by the data of the Union Ministry of Consumer Affairs, Food and Public Distribution, the procurement of paddy (in terms of rice) all over the country was nearly 119.86 lakh tonnes as on October 31, 2025 compared to 82.08 lakh tonnes on the corresponding day last year. In the last three years, with regard to rice and wheat, the quarterly opening stock position, as on October 1, was consistently higher than what is prescribed under the norms for the central pool. In the case of rice, the quantity is at least two times more than the requirement. In October this year, the stock was 356.1 lakh tonnes against the norm of 102.5 lakh tonnes.

Compared to wheat, rice is still abundant, if one goes by the Union government’s data for the last three years on procurement and offtake under the National Food Security Act (NFSA) and other schemes. Between April 2022 and March 2025, the procurement of rice at the all-India level hovered around 525 lakh tonnes-547 lakh tonnes every year, whereas annual offtake under the Public Distribution System (PDS) was in the range of 392 lakh tonnes- 427 lakh tonnes.

Significantly, in the case of wheat, the utilisation under the PDS exceeded the quantity of procurement in two of the last three years (barring 2024-25). At the same time, it must be noted that the Union government spends around ₹2 lakh crore every year in food subsidy.

While, on the one hand, the country is grappling with surplus stocks of rice, on the other it is incurring a huge expenditure in the import of pulses and oilseeds, which are two essential commodities that are central in every Indian household. Ironically, in the case of pulses, India is the largest producer in the world — 252.4 lakh tonnes in 2024-25. The two years, from 2023-24, saw a substantial fall in the procurement of notified pulses at minimum support prices (MSP) through agencies which included the National Agricultural Cooperative Marketing Federation of India.

Edible oil imports

According to the annual report of the Union Ministry of Agriculture and Farmers Welfare for 2024-25, the country imported edible oil (₹1.2 lakh crore) and pulses (₹30,000 crore) during 2023-24. In the case of edible oil, about 55% of the demand is met only through imports. Needless to say, the Russia-Ukraine war, which began in February 2022, is a factor that contributed to the steep rise in the cost of edible oil imports which was around ₹82,000 crore in 2020-21, though the quantity imported remained between 135 lakh tonnes-157 lakh tonnes a year in the last six years.

Ironically, the country’s production of oilseeds, since 2014, crossed the 400-lakh-tonne mark only once, despite there being no large change in the area covered, which was around 25 million hectares. For about 25 years, experts and the media have been holding the government’s decision in the 1990s to allow the import of cheaper edible oil responsible for the adverse effect on domestic production. Yet, the response to counter the impact has not been adequate.

The situation raises a fundamental question: whether the country, in the name of ensuring food security, is following a sustainable policy of procurement at least with regard to rice. It also raises other pertinent questions. Is paddy cultivation being encouraged at the cost of crop rotation? Also, why is it that the country’s efforts to improve pulse and oilseed production have not been spectacular unlike in the case of paddy and wheat about 55 years ago? And, should India continue to have the existing arrangement of one or the other central agency in the procurement, storage, transportation and allocation of foodgrains in bulk to the States?

The authorities may protest, if any study is conducted with regard to leakage in the PDS (which was originally meant for managing food supplies during scarcity), as they did about a year ago when an Indian Council for Research on International Economic Relations (ICRIER) report had stated that there was about a 28% loss of rice and wheat during distribution. It is also well known that the system is far from perfect.

Incentivise crop diversification

To wean paddy-growing farmers from the cereal, crop diversification can be tried out after carrying out area-specific market studies of demand and supply with the involvement of every stakeholder. . One reason why farmers have not taken to diversification in a big way is uncertainty about success if there is a crop switch. Their apprehension can be allayed only by offering financial support and proper guidance. As it is clear that the country is producing more rice than required, the government should allow farmers to freely export rice and not resort to restrictions in a knee-jerk manner.

Many a time, primary procurers of agricultural products are in the dark about the suppliers. For instance, papad manufacturers getting to tie-up directly with farmers who raise blackgram or have the means to do so, will result in a win-win situation for both. If such farmers are able to organise themselves as farmers producers’ organisations (FPOs), the results will be more durable. The Centre and the States can facilitate such an arrangement.

As an institution, FPOs are still in a nascent stage. Their services can be tapped by the authorities for a range of purposes — educating farmers about soil health; sensitising them to go in for crop diversification; preparing the groundwork for market studies, and establishing the supply chain.

As in West Bengal, FPOs can be utilised for paddy procurement to reduce the load on existing players. Self-help groups and cooperative societies should also be encouraged more in this respect. Wherever required, all such new entrants should be covered under capacity building programmes.

Changes in such a complex system cannot happen overnight but a beginning can be made. It is time that agriculture experts, farmers, food security specialists, policy makers and planners collectively deliberated on ways to plug the loopholes in the system, if not reform it.

Published – November 19, 2025 12:16 am IST

A worker removing weeds from a maize field near Kanchikacherla in NTR district in 2024.
| Photo Credit: RAO G.N.

The story so far: Union Minister Nitin Gadkari said that India will achieve its target of 20% ethanol blending of petrol in the next two months, at least a year ahead of what was originally planned. This would entail the production of nearly 1,100 crore litres of fuel ethanol in one year.

Where will this come from?

The 1,100 crore litres of fuel ethanol will come from sugar and high grade molasses, Food Corporation of India (FCI) rice, broken rice, and maize. India’s ethanol distillery capacity has ramped up to 1,600 crore litres, driven by a range of government incentives and the promise of a stable, lucrative market.

Also read: Understanding ethanol blending 

Sugar is expected to provide some 400 crore litres this ethanol year, according to Deepak Ballani, director general of Indian Sugar and Bio-energy Manufacturers Association. India had closing sugar stocks of around 80 lakh tonnes in October 2024. The projected sugar production for next year is around 315 lakh tonnes out of which 40 lakh tonnes will go to fuel ethanol. Mr. Ballani said that ethanol for non-fuel uses will come from low grade molasses called C Heavy that don’t go into sugar production.

The government recently decided to reduce the price of FCI rice to distilleries from ₹28 to ₹22.5 per kg. The government handout states that some 110 crore litres of ethanol will be produced from FCI rice this ethanol year. This means almost 400 crore litres of fuel ethanol should come from maize. For context, India was producing little or no ethanol from maize until 2020. Besides pure-play grain-based distilleries coming up, some sugar distilleries have modified to dual-feed so in the off-season they can use other feedstock (maize) to produce ethanol.

How is maize playing a role?

India’s maize production is just about enough for traditional needs such as for the poultry sector, livestock feed, starch production and some 10% for human consumption. As the government had imposed curbs on allowing sugar and high quality molasses for ethanol production, maize imports started ramping up in April 2024. From April to June, approx. ₹100 crore worth of maize was imported while, for 2023-24, maize imports were approx. $33 million. Ministry of Commerce figures show that a total of $188 million worth of maize was imported from April to November 2024.

The promise of a steady, lucrative ethanol market has meanwhile goaded many farmers to take to maize cultivation across India. The major maize producing States are Karnataka, Madhya Pradesh, Maharashtra, Andhra Pradesh, Rajasthan, Bihar, and Uttar Pradesh. For the 2024-25 ethanol year, maize output would be some 42 million tonnes out of which nine million can go towards producing the 350 to 400 crore litres of ethanol, H. S. Jat, director ICAR Indian Institute of Maize Research, Ludhiana, said. Citing good prospects for kharif this year, he said importing maize will not be necessary.

Since 2020-21. when ethanol production was almost all sugar-based, maize production had increased by nearly six million tonnes in three years, for potential ethanol use.

As things stand now, maize is cultivated in 10% more area at a higher yield, says Mr. Jat who also expects some diversion from traditional maize uses since supplying to ethanol is more lucrative for farmers. On whether that won’t disrupt the market, Mr. Jat says DDGS (Distiller’s Dried Grains with Solubles), a byproduct of ethanol, can be used for poultry. The long-term sustainability of fuel ethanol would depend on whether the switch to ethanol and stress on maize has a negative impact on production of other foodgrains. Mr. Jat estimates that 100 crore litres of fuel ethanol translates to ₹6,000 crore savings on oil imports and the money going into the internal economy including to farmers. For context, India’s yearly oil import bill is some ₹10.5 lakh crore.

Amid the heat of the ongoing Lok Sabha electioneering, the Centre has announced plans to significantly increase wheat purchase from non-traditional States of Uttar Pradesh, Rajasthan and Bihar and set a target of seven-fold jump in procurement to 50 lakh tonnes in the ongoing 2024-25 marketing year.

Further, even as the ban on outbound shipments of wheat continues, “it will be a dream for us to export now”, Food Secretary Sanjeev Chopra told reporters on April 4.

“U.P., Bihar, and Rajasthan have been contributing much less than they could have. We are targeting total wheat procurement of 310 lakh tonne this year. Of which, we are hoping to procure at least 50 lakh tonne from three non-traditional procurement States alone,” he said.

While Uttar Pradesh, Rajasthan, and Bihar put together contributed only 6.7 lakh tonnes to the Central pool during the 2023-24 marketing year (April-March), the Union Food Ministry has decided to procure 16% of the total wheat procurement target of 310 lakh tonne set for 2024-25. Wheat procurement at Minimum Support Price (MSP) is normally undertaken by the Centre’s nodal agency Food Corporation of India (FCI) and State agencies. However, cooperatives Nafed and NCCF have also been roped in with a procurement target of five lakh each this year.

Wheat MSP has been fixed at ₹2,275 per quintal for the current year. Since October, the Centre has been working with these three States to increase the procurement level. “Various steps have been taken to address the gaps and it should help boost procurement levels in three States,” he said.

Asserting that 2024 general elections is unlikely to affect wheat procurement operations, the Secretary said the increase in wheat procurement from non-traditional States will help restore allocation of wheat under the Pradhan Mantri Garib Kalyan Anna Yojana and other welfare schemes.

“The allocation of wheat has been reduced to 184 lakh tonnes annually from the previous 230-240 lakh tonnes under various welfare schemes in view of lower procurement in the last two years,” he added.

Mr. Chopra also said the Centre has not directed traders to avoid buying wheat from farmers till the government completes procurement. “No such instruction has been given to traders,” he added.

Highlighting steps taken to strengthen wheat procurement in non-traditional States, the Secretary said the procurement window has been advanced/extended to March instead of April 1, set up a dedicated farmer helpline to address procurement-related queries, intensified media publicity of MSP rate, and drying facilities have been provided for early harvested crop.

Besides, the government has advanced farmer registration from January 1 instead of March 1, simplified farmers’ land record verification, including tenant farmers, given flexible procurement targets to agencies.

More importantly, the Secretary said the government has decided to ensure transfer of MSP to bank accounts of farmers within 48 hours, streamlined procurement incidental burden for farmers, smoothened banking-related issues such as Aadhaar integration with bank accounts.

“The government has also opened more procurement centres targeting production hotspots, set up mobile procurement centres, decide to leverage Self Help Groups, Panchayats, Farmer Producer Organisations,” he said.

“That apart, the government has ensured institutional preparedness through working capital to agencies to ensure payment of MSP to farmers within 48 hours,” he added.

The Secretary further mentioned that a Central control room has been set up in the FCI headquarters in Delhi for real-time monitoring of procurement ad coordination among various agencies.

According to the Food Ministry, six lakh tonnes of wheat have already been procured so far this year from six States — Uttar Pradesh, Madhya Pradesh, Rajasthan, and Bihar. The procurement from traditional States of Punjab and Haryana will begin soon.

On prices of wheat and rice, the Secretary said wheat flour and wheat prices are stable at present after introduction of retail sale of wheat flour at ‘Bharat’ brand. About 7.06 lakh tonne of wheat flour has been sold till now.

“Even retail inflation of rice remained stable at 13% and 14% for the last two months. About 3.1 lakh tonne of FCI rice has been sold under Bharat brand since February,” he added.

Asked if the government will revisit the wheat export ban amid estimates of higher production, the Secretary said, “It’s a dream for us to export now.” The government has banned wheat exports since May 2022 to boost domestic availability and check prices.

The wheat production is estimated to be a record 112 million tonne during 2023-24, compared to last year’s 110 million tonnes as per the Agriculture Ministry.

File photo
| Photo Credit: SRINATH M

The government has increased the authorised capital of state-run Food Corporation of India (FCI) from ₹10,000 crore to ₹21,000 crore to enhance the operational capabilities and fulfill its mandate effectively, the Food Ministry said on February 17.

FCI is the central government’s nodal agency that undertakes the procurement of foodgrains at a minimum support price (MSP) to protect the interest of farmers. It also maintains strategic stocks and distributes the grains under different welfare schemes.

“The increase in authorised capital is a significant step towards enhancing the operational capabilities of FCI in fulfilling its mandate effectively,” the Ministry said in a statement. FCI resorts to cash credit, short-term loan, ways and means etc. to match the gap in the fund requirement. The increase in the authorised capital will reduce the interest burden, decrease the economic cost and ultimately affecting the government subsidy positively, it said.

With this infusion of capital, the FCI should also embark upon modernising its storage facilities, improving transportation networks, and adopting advanced technologies.

These measures are essential not only for reducing post-harvest losses but also for ensuring efficient distribution of food grains to consumers, it added.

Creating capital assets

The Centre provides equity to the FCI for working capital requirements and the creation of capital assets. The FCI is undertaking a comprehensive initiative to create an integrated IT system, leveraging existing internal and external systems.

Through the e-office implementation, FCI is making efforts towards a paperless office culture. These initiatives of integrated IT solutions serving as the core operational software for FCI, should provide a single source of information and streamline functions with a common digital backbone.

According to the Ministry, the FCI has taken several steps to enhance its efficiency including construction of cement roads, roof maintenance, illumination, and weighbridge upgradation.

Besides, it has also purchased lab equipment and developed a software platform for quality checking.

The government’s dual commitment to MSP-based procurement and investment in FCI’s operational capabilities signifies a collaborative effort towards empowering farmers, fortifying the agricultural sector, and ensuring food security for the nation, it said.

Union Minister of Consumer Affairs, Food and Public Distribution Piyush Goyal addresses virtually during the 60th Foundation Day celebration of the Food Corporation of India (FCI), in New Delhi on Sunday. Secretary, Department of Food and Public Distribution, Sanjeev Chopra, and CMD Food Corporation of India (FCI) Ashok k.k. Meena are also seen.
| Photo Credit: ANI

The role of the Food Corporation of India (FCI) is not only to deliver ration, but also to instill confidence in farmers and beneficiaries by bringing in transparency, efficiency and accountability, said Union Food Minister Piyush Goyal here on Sunday in his address on the 60th foundation day of the FCI. Mr. Goyal urged the youth and officers in the FCI to turn as whistleblowers to ensure transparency in running the organisation.

He said the FCI should emerge as a trusted partner of farmers and people of the country. “The FCI plays a crucial role in facilitating flagship schemes such as Pradhan Mantri Garib Kalyan Anna Yojana [PMGKAY] by providing ration to beneficiaries in every corner of the country,” the Minister said, reminding the officers that the role of the FCI was not only to deliver the ration. He added that Prime Minister Narendra Modi had promised to make India free of corruption and asked the youth and staff of the FCI to bring in transparency and become whistleblowers.

‘Ensure quality’

Mr. Goyal said the FCI needed to embrace digitalisation and technology by ensuring quality. “Quality can be achieved in areas such as inspection, procurement, transportation, distribution and storage,” he said, and suggested the FCI to reduce operational costs through route optimisation, mechanised loading/unloading, innovative storage solutions and others.

The Minister said the open market sale scheme (domestic) operations had also proved to be an effective tool in moderating the prices of wheat and rice. “Bharat Atta, Bharat Dal, interventions regarding onion and tomato have assisted the Government of India in price stabilisation,” Mr. Goyal said.

The Union Food Ministry indicated that it is willing to make changes to the Open Market Sales Scheme after the first e-auction of rice
| Photo Credit: SHIV KUMAR PUSHPAKAR

As the Congress attacked the Centre on Monday over the reluctance of private players to auction rice from the Food Corporation of India (FCI) under the Open Market Sales Scheme, the Union Food Ministry indicated that it is willing to make changes to the scheme. The Centre had recently restricted the States from purchasing food grains using OMSS and the Congress said the BJP Government was favouring private players over State governments.

Centre may tweak policy

Union Food Secretary Sanjeev Chopra said the Centre is aware of the lukewarm response to the OMSS by traders and is watching the situation. He, however, maintained that it was the first e-auction of rice and the Centre is open to tweaking the policy.

Also read: Explained | The Centre-state tussle over the Open Market Sale Scheme

He, however, said the policy cannot be changed for a State or a class of people. He said more than 15 States, including Tamil Nadu supported the Centre’s stand in the meeting. “Let’s not get discouraged with one round not getting good response. ….Usually, FCI does not do routine OMSS for rice. It is primarily done for wheat. For rice, it just started. We expected more (response) for rice, but it has not happened,” Mr. Chopra said.

He said the Centre’s intention was to give a signal to the market that the stock is with the government we and will use it in the interest of the common man to bring down the prices. “We will wait and watch. We don’t want to jump the gun. This is the first auction. The government is open to changes,” he added.

Cash transfer scheme

Congress general secretary Jairam Ramesh, meanwhile, said in a statement that the Government in Karnataka will not be shaken in its resolve to implement the Anna Bhagya scheme. “The cash transfer scheme launched today by the Congress Government in Karnataka is a strong reply to the Modi Government’s vindictive policies in regard to food security for the poor, especially in a State where the BJP was comprehensively rejected,” he said.

He said the e-auction of rice flopped miserably and more than 99% of the rice offered for e-auction remained unsold. “In any case, it is clear that the Modi Government has greater faith in private traders to control inflation than in state governments and the public distribution system,” he said.

The story so far: On September 9, the Centre instituted a ban on the export of broken rice. Additionally, it mandated an export duty of 20% on rice in husk (paddy or rough), husked (brown rice) and semi-milled or wholly-milled rice. The measures do not affect export of basmati or parboiled rice. The Secretary at the Department of Food and Public Distribution Sudhanshu Pandey stated that the measures would ensure adequate availability of broken rice for consumption by the domestic poultry industry and for other animal feedstock. Additionally, it would sustain production of ethanol that would further assist the successful implementation of the Union government’s Ethanol Blending Programme (EBP). However, the measures may affect countries dependent on Indian food exports in the face of a lost ‘breadbasket’ in Ukraine owing to the Russian conflict.

What does it have to do with inflation?

The lower the supply of a commodity, the higher would be the price of a product, which results in inflationary pressures. The adequacy of rice stocks in the country would ensure that markets do not experience excess demand and thus, trigger an abrupt price rise. For seven consecutive months, inflation has been above the Reserve Bank of India’s 6% tolerability threshold. The Consumer Price Index (CPI), or retail-based inflation, stood at 7% in August this year with rural and urban inflation scaling 7.15% and 6.72% respectively. This was furthered by an uptick of 7.62% in food prices during the same period.

The COVID-19 pandemic also had an impact on India’s previously held surplus. As a reaction to the distresses caused by the pandemic to the vulnerable sections the Union Cabinet had introduced a food security program, called the Pradhan Mantri Garib Kalyan Anna Yojana (PM-GKAY) in March 2020. The scheme provisions an additional 5kg ration per person each month in addition to their normal quota of foodgrains under the National Food Security Act. In March, the scheme was extended for another six months until September 2022.

The Hindu Businessline had reported this week that foodgrain stocks (including rice, wheat and unmilled paddy) in the Food Corporation of India (FCI)’s central pool had dropped 33.5% on a year-over-year basis to 60.11 million tonnes as of September 1 — prompting doubts on the continuation of the scheme. Research analysts at Nomura observe that on the whole, though rice stocks should remain above buffer levels, the current export restrictions may not necessarily improve the demand-supply situation materially, implying, that there remains an upside risk to the price of rice. “As such, we believe there is a risk that further curbs on rice exports could be imposed, particularly in categories still exempted,” it states.

What happened to rice production?

The major rice cultivation season in India is the Kharif season, that entails sowing the crop during June-July and harvesting them in November-December.

It is imperative to note that rice is a water-intensive crop which also requires a hot and humid climate. Thus, it is best suited to regions which have high humidity, prolonged sunshine and an assured supply of water. It is for this reason that the eastern and southern regions of the country, with sustainable humidity and suitable mean temperatures are deemed favourable for the crop. While the two regions are able to grow paddy crops throughout the year, higher rainfall and temperature prompt the northern regions to grow only one crop of rice from May to November. Andhra Pradesh, Telangana, Punjab, Haryana, Chhattisgarh, Odisha, Madhya Pradesh, Tamil Nadu, Maharashtra, Uttar Pradesh and Bihar are among the rice producing States in India.

A perusal of Indian Meteorological Dept’s data, between June 1 and September 14 illustrate that Uttar Pradesh, Jharkhand, Punjab and Bihar have experienced deficient rainfall. The latter refers to rainfall being 20-59% below normal in a particular region. Although West Bengal, the country’s largest producer, has overall experienced a normal rainfall, its major productivity areas such as Nadia, Burdwan and Birbhum have had deficient rainfall. This indicates a potentially lower produce this year.

What are the concerns on ethanol blending?

Ethanol is an agro-based product, mainly produced from molasses, which is a by-product of the sugar industry. The EBP endeavours to blend ethanol with vehicular fuels as a means to combat the use of fossil fuels and in turn, rising pollution. As per the government, sugar-based feed stocks alone would not be able to meet its stipulated target of 20% ethanol blending by 2025.

In the 2018-19 Ethanol Supply Year (ESY), the government had allowed the FCI to sell surplus rice to ethanol plants for fuel production. The idea was to have in place an insurance scheme and an emergency provision for distillers.

However, in the ongoing ESY, because of supply constraints there has been an uptick in the procurement of rice from the FCI. The total ethanol produced from rice lifted from the FCI stood at 26.64 crore litres whereas that from damaged food grains outside the FCI purview stood at 16.36 crore litres. This means that the production accruing from FCI rice has increased 10-fold from the 2.2 crore litres used in a full ESY. At the same time, production from damaged foodgrains stands at half.

Thus, the export ban would endeavour to catch-up with this supply and additionally, unburden the FCI from provisioning to distillers.

What are the likely after-effects of the ban?

Geopolitical tensions between Russia and Ukraine have unsettled global food supply chains. With trade disrupted in the Black Sea region, Bloomberg reported in March that prices of rice are surging because traders are betting it will be an alternative for wheat which is becoming prohibitively expensive.

India accounted for 41% of the total rice exports in the world in 2021 larger than the next four exporters (Thailand, Vietnam, Pakistan and United States) combined.

As for broken rice, the United States Department of Agriculture (USDA) states that India accounted for more than half of the commodity’s global exports in the first half of 2022. As per government figures, between April and August this year, broken rice’s share in the overall rice export mix (of India) was 22.78% compared to 18.89% in FY 2021.

In descending order, China, Senegal, Vietnam, Djibouti and Indonesia are the biggest importers of India’s broken rice.

Senior Executive Director at the All-India Rice Exporters Association Vinod Kumaar Kaul told The Hindu, “Thailand, Vietnam and Pakistan would gain should we happen to lose this market. Once lost, regaining the market would be a task.”

Mr. Kaul pegs the losses to the exporters from the ban to be around ₹5,600 crore for the full year.

THE GIST

On September 9, the Centre instituted a ban on the export of broken rice. Additionally, it mandated an export duty of 20% on rice in husk (paddy or rough), husked (brown rice) and semi-milled or wholly-milled rice. 

In the ongoing Ethanol Supply Year, because of supply constraints there has been an uptick in the procurement of rice from the FCI. The export ban is a means to catch-up with this supply and additionally, unburden the FCI from provisioning to distillers.

With trade disrupted in the Black Sea region, prices of rice are surging because traders are betting it will be an alternative for wheat which is becoming prohibitively expensive. India accounted for 41% of the total rice exports in the world in 2021.