What Happened
- A Parliamentary Standing Committee has raised concern over the Food Corporation of India's (FCI) consistently low and declining share in the direct procurement of rice and wheat.
- The committee observed that the bulk of foodgrain procurement operations are now carried out by state government agencies, with FCI's share in direct procurement falling to less than five per cent of total procurement.
- The panel flagged this trend as a concern for the effectiveness of the centralised buffer stocking mechanism and the reliability of the public distribution system.
- The government has set a wheat procurement target of 30.3 million tonnes (MT) for the 2026-27 rabi marketing season (RMS), approximately at the same level as the 30.03 MT procured in 2025-26.
- The rice procurement target for the 2025-26 rabi season has been fixed at 7.6 MT.
Static Topic Bridges
Food Corporation of India (FCI): Role, Structure, and Statutory Basis
The Food Corporation of India (FCI) was established under the Food Corporations Act, 1964, to serve as the Central Government's nodal agency for the procurement, storage, transport, and distribution of foodgrains. FCI was created following the food crisis of the early 1960s to insulate food prices from market volatility, maintain strategic buffer stocks, and ensure availability of grain for the Public Distribution System (PDS). Under its original mandate, FCI was to directly procure grain from farmers at the Minimum Support Price (MSP). Over time, state governments and their agencies (State Civil Supplies Corporations, State Warehousing Corporations) have come to handle the ground-level procurement, with FCI taking on a more supervisory and central stocking role. FCI's share of direct procurement has declined to below 5 per cent; the rest is handled by state agencies, which then hand over stocks to FCI for the Central Pool.
- Established under: Food Corporations Act, 1964
- Nodal ministry: Ministry of Consumer Affairs, Food and Public Distribution
- Headquarters: New Delhi
- Primary functions: MSP-based procurement, buffer stocking, distribution to state governments, price stabilisation
- Operational model: Central Pool system — state agencies procure and surrender stocks to FCI; FCI allocates to states for TPDS
- FCI's direct procurement share: currently less than 5 per cent of total central pool procurement
- Hiranandani Committee (2014) and Shanta Kumar Committee (2015) both recommended restructuring of FCI's operational role
Connection to this news: The parliamentary committee's concern is that FCI's shrinking direct procurement role may weaken its ability to serve as an effective buffer stock manager and market price stabiliser, particularly if state agencies differ in procurement quality standards or logistics.
Minimum Support Price (MSP) Mechanism and Procurement
The Minimum Support Price (MSP) is an administered price announced by the Central Government before each crop season to provide a guaranteed minimum return to farmers, irrespective of market price movements. The Commission for Agricultural Costs and Prices (CACP), an attached office of the Ministry of Agriculture and Farmers Welfare, recommends MSPs based on cost of production (A2+FL and C2 costs), demand-supply factors, price trends, and inter-crop price parity. The Cabinet Committee on Economic Affairs (CCEA) gives final approval. FCI and state agencies procure rice (as paddy, milled to rice) and wheat at MSP during the Kharif and Rabi marketing seasons respectively. The procured grain enters the Central Pool for distribution under the National Food Security Act (NFSA) 2013 and other welfare schemes.
- MSP recommending body: Commission for Agricultural Costs and Prices (CACP)
- Final approving authority: Cabinet Committee on Economic Affairs (CCEA)
- Crops covered by MSP: 23 crops (14 kharif, 7 rabi, 2 commercial) as of recent years
- Key cost concepts: A2 (paid-out costs), A2+FL (paid-out + family labour), C2 (comprehensive cost including imputed rent/capital)
- Government policy: MSP set at least 1.5× cost of production (A2+FL basis) since 2018-19
- Procurement season: Wheat — Rabi Marketing Season (April onwards); Rice — Kharif Marketing Season (October onwards) + Rabi season
- FY 2025-26 wheat procurement (actual): ~30.03 MT; FY 2026-27 target: 30.3 MT
Connection to this news: The decline in FCI's direct procurement share means that MSP benefits reach farmers primarily through state agencies rather than FCI directly. The committee's concern is whether this shift affects the uniformity, coverage, and price floor effectiveness of MSP operations.
National Food Security Act (NFSA) 2013 and Public Distribution System
The National Food Security Act, 2013 (NFSA) is the statutory framework that entitles up to 75 per cent of the rural population and 50 per cent of the urban population (approximately two-thirds of India's total population) to receive subsidised foodgrains under the Targeted Public Distribution System (TPDS). Each eligible individual is entitled to 5 kg of rice, wheat, or coarse grains per month at subsidised prices. The Pradhan Mantri Garib Kalyan Anna Yojana (PMGKAY), now merged into NFSA from January 2023, provides grain free of cost. The Central Government procures grain into the Central Pool (via FCI and state agencies) and allocates it to state governments, which distribute it through Fair Price Shops. Adequate Central Pool stocks — maintained as buffer and strategic reserves — are essential for NFSA implementation.
- Statutory basis: National Food Security Act, 2013
- Coverage: up to 75% rural, 50% urban population (~81.35 crore beneficiaries)
- Entitlement: 5 kg per person per month at ₹0 (free, post-PMGKAY merger from Jan 2023)
- PMGKAY merger: free grain distribution integrated into NFSA from January 1, 2023
- Central Pool buffer norm: minimum 10.88 MT (wheat) + 13.58 MT (rice) as operational + strategic reserve [Unverified — varies by season; indicative norms]
- Distribution chain: Central Govt → FCI (Central Pool) → State Govts → Fair Price Shops → beneficiaries
Connection to this news: The committee's concern about declining procurement links directly to food security: if FCI's procurement infrastructure weakens relative to demand, it could affect the Central Pool stock adequacy needed to fulfil NFSA obligations, particularly during lean production years.
Key Facts & Data
- FCI established: 1964, under Food Corporations Act, 1964
- FCI direct procurement share: less than 5 per cent of total central pool procurement (rest by state agencies)
- Wheat procurement target FY 2026-27: 30.3 MT
- Wheat actual procurement FY 2025-26: ~30.03 MT from ~2.6 million farmers
- Rice procurement target (Rabi 2025-26): 7.6 MT
- NFSA beneficiary coverage: ~81.35 crore persons
- MSP recommending body: CACP (Commission for Agricultural Costs and Prices)
- MSP final approval: Cabinet Committee on Economic Affairs (CCEA)
- Key parliamentary committees overseeing FCI: Standing Committee on Food, Consumer Affairs and Public Distribution
- Shanta Kumar Committee (2015): recommended FCI restrict direct procurement operations, decentralise to state agencies — directionally aligned with current trend the House panel is now flagging as a concern