Market distortion in the form of bonus over and above the minimum support price (MSP) by some States and open ended procurement policy have led to accumulation of rice stocks much higher than the stocking norms, the Commission for Agricultural Costs and Prices (CACP) has said in a report.
“Many state governments pay direct or indirect bonus, which adversely affects crop diversification initiatives, restrict private trade participation and competition and result in excess stocks,” CACP in its kharif crops marketing season (2026-27) report noted.
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Due to rising volume of procurement of rice due to bonuses, the commisson, which recommends MSP for 23 crops to government, has stated that there is a need to review open-ended procurement policy for rice and persuade states to not announce bonus on paddy, particularly in grain surplus states.
The commission noted that as against 7.66 million tonne (MT) of stocking norms of rice for Central Pool as on 1st January, total rice stocks were 33.66 MT as on 31st January, 2026 (closing stocks), nearly 4.4 times the stocking norms.
Last month, the department of expenditure’ directives to states to refrain from announcing bonus over minimum support price (MSP) for paddy and wheat procurement, mainly attributed to rising central pool stocks which are currently three times that of buffer and has caused fiscal and ecological burden.
“Bumper production of wheat and paddy has resulted in wheat and rice stocks far exceeding requirements for the public distribution system (PDS), buffer norms and other welfare and contingency needs. The surplus continues to rise year after year, creating a significant and recurring burden on the public exchequer,” V Vualnam, expenditure secretary, in a communication to N Muruganandam, Chief Secretary, Tamil Nadu, last month had stated.
Currently, Odisha provides input subsidy of Rs 800/quintal over paddy MSP while Chhattisgarh pays Rs 9,000/acre with a ceiling of 15 quintal paddy/acre. Kerala had announced, state incentive bonus for paddy farmers at Rs 631/quintal for kharif marketing season 2025-26 (October-September) over the centre’s MSP of Rs 2389/quintal.
Jharkhand and West Bengal have announced a bonus of Rs 100 and Rs 20/quintal over paddy benchmark price respectively in the ongoing season. Rajasthan and Madhya Pradesh have announced bonus for wheat purchase during the last several years.
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The commission has stated that the government’s food subsidy expenditure currently over Rs 2 lakh crore annually has been a key instrument in achieving food security by ensuring access to affordable food, especially for economically vulnerable households.
However, the subsidy burden has risen substantially over the years due to rising economic cost of foodgrains and the non-revision of the central issue price (rice provided free to states for distribution under the Pradhan Mantri Garib Kalyan Anna Yojana.
TOPICSPaddy pricesThis article was first uploaded on May thirteen, twenty twenty-six, at thirty-four minutes past eleven in the night.