The Commission for Agricultural Costs and Prices has recommended that the Competition Commission of India look into the issue of state agencies monopolising foodgrain procurement. Led by the Food Corporation of India, the state agencies procure up to 90 per cent of wheat and rice arrivals in Punjab, Haryana, Madhya Pradesh, Chhattisgarh and Andhra Pradesh.

“This is driving out private sector from the market, leading to a de-facto takeover of grain trade in these States,” says the Commission in its latest report on Rabi price policy. The Commission blames the Centre’s open-ended procurement policy, high levies imposed by Punjab and Haryana, and bonuses announced over and above the Minimum Support Price by Madhya Pradesh and Chhattisgarh.

“…There is no competition left,” Commission Chairman Ashok Gulati told Business Line . Gulati said States step in to support farmers through the MSP when prices crash post harvest. “We (the Government) are not leading the market. We are backstopping as the lender of the last resort. That is the role of MSP. Now, if some State announces a bonus of 20-40 per cent, what are we doing? You are taking over the entire market...”

This year M.P. declared a bonus of 11 per cent on wheat over the MSP of Rs 1,350/quintal, while last year Chhattisgarh gave 22 per cent more for rice. In Punjab, high mandi taxes and levies of 14.5 per cent have virtually driven out the private trade.

“Whether done deliberately or as a consequence of the Food Security Act… the Government should be buying in a competitive market. Our job is to ensure MSP and not strangulate the market,” Gulati said.

>vishwanath.kulkarni@thehindu.co.in

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