The next step in the supply chain of food grain distribution is the processing of the food grains by the Rice mills (our example we started with). This seems to be simple, after all the mill should remove the husk and the rice is ready to be cooked, isn’t it?
Not quite so.
Not quite so.
The rice mills have licensed permission to process the paddy. One might ask, why should there be License Permit Raj? Well, I came to know of instances where the bursting of boilers in unauthorized mills was reported. So one of the reasons I know, which is told, is to ensure safety of the production process. The other reason informed is to ensure equitable distribution of the excess production capacity and avoid monopolistic tendencies of large millers. So the annual rice procurement targets for the millers are informed at the beginning of the arrival of paddy in the market. The district level committee which decides the quota to be deposited to the Government consists of the Collector, the representatives of the Panchyat bodies, the officials of food department, the representatives of the cooperatives, representatives of FCI, and the members of the rice millers associations amongst others. This broad base ensures the fairness of the system.
Now consider that there has been a bumper crop in the state and neighbouring states (you may also consider neighbouring country if you are in a border state) then the market will be flooded with surplus crop and the market price will drop. The Government procurement price will be higher than the market price and the millers would crowd to sell the processed rice to the Government food department. This might lead to favour of some millers at the cost of others if the district level monitoring committee is not strong.
In contrast if the crop has not been so good around then the market price of rice could be higher than the Government procurement price of rice from the miller. The millers then try to avoid selling the rice to the Government and prefer to sell it in the open market. Then, illegal understanding with the officials involved might lead to forcing a few millers to sell their rice to the Government while the favoured ones will sell it at higher margins in the free market.
Then there are issues of which cooperative society will sell its paddy procured to which miller (they prefer the nearest ones, but the milling capacity and the paddy available might not match) and imposition of the minimum support price (MSP) in the purchase of paddy by the millers. At the time of delivery of the processed rice to the Government the millers are supposed to submit documents signed by the inspectors of the Food department that the rice is produced from the paddy procured at the MSP. Sadly, the inspectors give that certificate to one and all and the MSP mostly gets implemented on paper only.
The millers pay less price to the cooperatives, traders or the farmers who approach them to sell the paddy on the ground of high moisture content, high dust content and poor grain quality etc. then what is approved by the Government. No doubt rice millers are politically very powerful and their network exists from the block level where the mills work to the sub-division, district, state and national level. Some of the bigger traders who purchase and stock the paddy are also relatives and family members and hence I found that the inspectors were too small to impose anything upon the people with huge financial power.
As I had discussed above, in a year of poor crop or huge demand from across the borders, the tendency of the foodgrain is to fly out of the Government system. Thus, in the beginning of the processing season, Government through its food department enters into agreement with the individual millers for the quantity of rice they will have to sell to the Government based upon their production capacity. In case if they don’t enter into agreement, the Levy rice can be collected by the officials for Government based upon the percent of rice produced by the mill. The percentage of levy varies from state to state while 50% is an approximation for the median.
In a bad crop production year, I had to pass tough time to monitor the quantity of rice that was being processed by the millers and had to strictly enforce the collection of levy, though we could cross the target for the district in the end, and were probably the only district to do so.
The amount of rice produced by a mill can roughly be estimated if the accurate amount of paddy procured is known, as different state governments accept about 63% to 67% of rice production from the paddy used. Once the rice has been processed, it is delivered as per the agreement to the Food department for further use by them. This could be local distribution in the deficient districts or for transportation to the FCI godowns in the surplus states and districts, from where the FCI will dispatch it to the other parts of the country.
The food department of that state and the districts for which it is meant will keep an eye on the allotment received and the arrival of the rakes of the foodgrain. The grain is unloaded at the sidings and sub-allotments made to the districts. As usual the early bird…….., i.e. the alert districts are able to draw the allotment in their areas first. The foodgrain is stored in the Government or other godowns and then the district controller makes the allotment order for the various schemes, based on which the district level distributors collect their quota of allotments. From their godowns the MR dealers (ration shop owners) collect the food grain and inform the public of the receipt of the allotment (if they really do).
I will discuss the places where at times I faced serious problems and loopholes in ensuring the collection and distribution of the foodgrain in some other post.
Now consider that there has been a bumper crop in the state and neighbouring states (you may also consider neighbouring country if you are in a border state) then the market will be flooded with surplus crop and the market price will drop. The Government procurement price will be higher than the market price and the millers would crowd to sell the processed rice to the Government food department. This might lead to favour of some millers at the cost of others if the district level monitoring committee is not strong.
In contrast if the crop has not been so good around then the market price of rice could be higher than the Government procurement price of rice from the miller. The millers then try to avoid selling the rice to the Government and prefer to sell it in the open market. Then, illegal understanding with the officials involved might lead to forcing a few millers to sell their rice to the Government while the favoured ones will sell it at higher margins in the free market.
Then there are issues of which cooperative society will sell its paddy procured to which miller (they prefer the nearest ones, but the milling capacity and the paddy available might not match) and imposition of the minimum support price (MSP) in the purchase of paddy by the millers. At the time of delivery of the processed rice to the Government the millers are supposed to submit documents signed by the inspectors of the Food department that the rice is produced from the paddy procured at the MSP. Sadly, the inspectors give that certificate to one and all and the MSP mostly gets implemented on paper only.
The millers pay less price to the cooperatives, traders or the farmers who approach them to sell the paddy on the ground of high moisture content, high dust content and poor grain quality etc. then what is approved by the Government. No doubt rice millers are politically very powerful and their network exists from the block level where the mills work to the sub-division, district, state and national level. Some of the bigger traders who purchase and stock the paddy are also relatives and family members and hence I found that the inspectors were too small to impose anything upon the people with huge financial power.
As I had discussed above, in a year of poor crop or huge demand from across the borders, the tendency of the foodgrain is to fly out of the Government system. Thus, in the beginning of the processing season, Government through its food department enters into agreement with the individual millers for the quantity of rice they will have to sell to the Government based upon their production capacity. In case if they don’t enter into agreement, the Levy rice can be collected by the officials for Government based upon the percent of rice produced by the mill. The percentage of levy varies from state to state while 50% is an approximation for the median.
In a bad crop production year, I had to pass tough time to monitor the quantity of rice that was being processed by the millers and had to strictly enforce the collection of levy, though we could cross the target for the district in the end, and were probably the only district to do so.
The amount of rice produced by a mill can roughly be estimated if the accurate amount of paddy procured is known, as different state governments accept about 63% to 67% of rice production from the paddy used. Once the rice has been processed, it is delivered as per the agreement to the Food department for further use by them. This could be local distribution in the deficient districts or for transportation to the FCI godowns in the surplus states and districts, from where the FCI will dispatch it to the other parts of the country.
The food department of that state and the districts for which it is meant will keep an eye on the allotment received and the arrival of the rakes of the foodgrain. The grain is unloaded at the sidings and sub-allotments made to the districts. As usual the early bird…….., i.e. the alert districts are able to draw the allotment in their areas first. The foodgrain is stored in the Government or other godowns and then the district controller makes the allotment order for the various schemes, based on which the district level distributors collect their quota of allotments. From their godowns the MR dealers (ration shop owners) collect the food grain and inform the public of the receipt of the allotment (if they really do).
I will discuss the places where at times I faced serious problems and loopholes in ensuring the collection and distribution of the foodgrain in some other post.
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