UP govt to borrow Rs 2,000 cr for paying farmers during wheat procurement

Farmers use a combined harvester in a wheat field. Photo: PTI
Uttar Pradesh government plans to raise Rs 2,000 crore in bank loans to pay farmers in the rabi marketing season and wheat procurement during a national lockdown to contain the coronavirus.

The state cabinet recently approved the proposal of the UP State Food and Essential Commodities Corporation Limited to raise Rs 2,000 crore from Bank of Baroda to pay farmers against wheat procurement.

The government is targeting procurement of 5.5 million tonnes (MT) of wheat this season against the minimum support price (MSP) of Rs 1,925 per quintal (100 kg).

So far, more than 0.8 MT of wheat has been procured by the various procurement agencies. “The government has set up 5,500 procurement centres against the initial target of 5,000 centres, so that the farmers do not face any difficultly,” UP agriculture minister Surya Pratap Shahi told Business Standard here.

He said more than 250,000 tonnes of wheat had already been bought by the traders at different mandis across the state.

“Although the current procurement season started on April 15 compared to April 1 last year owing to the lockdown, yet the pace of procurement has been brisk and we are taking all steps to support the state farmers,” Shahi said adding nearly 50,000 tonnes of wheat was being procured on a daily basis.

The procurement of 5.5 MT of wheat this rabi season would directly translate into more than Rs 10,000 crore worth of payment to the farmers into their bank accounts in the current rabi marketing cycle. The farmers are free to sell their produce directly to traders if they get lucrative prices.
Last year, UP had failed to achieve its season target of 5.5 MT of wheat procurement and logged about 3.8 MT. The sluggish procurement in the 2019-20 rabi season was attributed to the 2019 Lok Sabha elections apart from the competitive prices in the open market, which offered a viable option to the famers to sell their produce.

Following the poor response last year, the state government had even extended the wheat procurement window by an additional 10 days to June 25, 2019 to partly achieve its target and keep the wheat prices firm in the market for the benefit of farmers. (See table) The current policy allows wheat procurement from share croppers and contract farmers as well if they are duly registered. In this season, the state is also promoting doorstep procurement of wheat.

Procurement target

(million tonnes)

(million tonnes)

(per quintal)
2013 6.0 0.7 Rs 1,350
2014 4.5 0.6 Rs 1,400
2015 3.0 2.2 Rs 1,450
2016 4.5 0.8 Rs 1,525
2017 8.0 3.7 Rs 1,625
2018 5.0 3.8 Rs 1,735
2019 5.5 5.3 Rs 1,840
2020 5.5 0.8 Rs 1,925


(million tonnes)

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