The Central Government provides price support to wheat and paddy through the Food Corporation of India (FCI) and various State Agencies. Procurement is carried out at the Minimum Support Price (MSP) and follows an open-ended system. This means that any quantity of foodgrains offered by farmers during the stipulated procurement period, provided it meets the quality specifications prescribed by the Government of India, will be purchased at the MSP (plus any applicable bonus or incentive).
Some states also declare an additional State bonus on wheat and paddy, over and above the MSP. Procurement operations are carried out at mandis, temporary purchase centres, and aggregation points, with the location and number of centres decided in consultation with State Governments.
The procurement mechanism for rice largely functions under the Custom Milled Rice (CMR) system:
Paddy Procurement: Paddy is primarily procured by State Governments, State agencies, and the FCI.
Milling: The procured paddy is milled into rice by empanelled rice millers.
Delivery: The resultant rice is delivered back to the State Government or the FCI, which then contributes to the Central Pool stock.
This system is widely followed in states such as Andhra Pradesh, Telangana, Punjab, Haryana, Chhattisgarh, Odisha, Madhya Pradesh, Tamil Nadu, Maharashtra, Uttar Pradesh, and Bihar.
Currently, the major share of wheat and paddy procurement is undertaken by State agencies, while the FCI accounts for nearly 70% of total rice procurement for the Central Pool.
