Jharkhand, which is plagued by a shortage of rice mills, has for the first time decided to take a loan from two public sector banks to procure paddy from farmers at minimum support price (MSP).

The Hemant Soren-led state cabinet had on Thursday evening announced taking a loan of Rs 1,552 crore (Rs 776 crore each from the State Bank of India and Bank of India) to buy 8 lakh metric tonnes of paddy from farmers.

“Apart from scant internal resources, the main reason for taking a loan is the less number of rice mills (nearly 68 mills are registered with Jharkhand State Food Corporation). We get payment from the Food Corporation of India only for rice and for that we need a large number of mills to convert paddy to rice, which would take a long time. We have to pay 50 per cent to the farmers on the spot and the rest in three months. To tide over this crisis, we had to take bank loans . It is a short term loan,” said a senior official in the Jharkhand State Food Corporation.

State agriculture minister Badal Patralekh corroborated the fact. “Apart from increasing rice mills, we also need storage yards at primary agricultural cooperative societies and large area multi-purpose societies. The government is working on making 200 more storage yards and at least 100 rice mills in the state,” he said.

The need to set up more rice mills was also felt by the chief minister.

“We will lay foundation stones for rice mills on December 29 in a large number,” Hemant said at Apke Adhikar-Apki Sarkar- Apke Dwar programme at Daltonganj on Friday.

The Jharkhand government will buy 8 lakh metric tonnes of kharif paddy from farmers. Last year, the target was to procure 6 lakh metric tonnes of paddy. Paddy was procured in excess of the target (6.85 lakh tonnes). The crop was cultivated across 17.61 hectares in the state this year. It had a target of producing 51 lakh metric tonnes, which is likely to be completed.

This time, the government has set a condition to buy only 200 quintals of paddy from each farmer. The MSP on the purchase of ordinary paddy is Rs 2,050 per quintal and the price of grade A paddy is Rs 2,070 per quintal

The state civil supplies-cum-finance minister Rameshwar Oraon had earlier this month announced that procurement of paddy would commence from December 15.

“All the districts have been asked to keep their basic infrastructure ready for operating the procurement centres to ensure that farmers are able to sell their crops in a hassle-free manner. Like last year, this time too, the government will offer 50% payment on the spot and the rest will be given in three months,” Oraon had said on Saturday.