Punjab’s flood crisis may hurt PDS procurement and impact paddy prices, fear experts

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Ravaged by floods, Punjab has been declared a disaster-affected state on September 3, with all 23 districts and at least 3 lakh acres of farmland - primarily paddy fields - severely hit, prompting experts to worry if this would lead to a short-term inflation in the crop prices and hurt government's PDS procurement pattern this season.

The natural calamity occurred in the midst of the kharif season of summer sowing, and weeks away from harvesting, which agri experts said is likely to impact India’s public distribution system (PDS), apart from export of rice.

“Most of the farmland that has been impacted are along the rivers, which means paddy crops will be the worst affected apart from wheat and millets like bajra (pearl millet) and jowar (sorghum). There is likely to be a deep impact on PDS and on the government of India’s procurement of rice and paddy from the state,” Indra Shekhar Singh, an independent agri-policy analyst said.

The Public Distribution System (PDS) provides subsidised essential commodities like rice, wheat and sugar to low-income families to ensure food security. Grains for the PDS system are primarily procured from surplus-producing states, with Punjab and Haryana being major contributors, according to officials. Most of the rice used in the government’s PDS is picked from Punjab. The state also has one of the highest number of farmers who get a Minimum Support Price (MSP) for procurements made by state agencies and the Food Corporation of India (FCI).

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Until November 2024, at least 6.58 lakh farmers in Punjab benefited from the government's paddy procurement at the MSP for the Kharif Marketing Season (KMS) 2024-25, which amounted to a total of Rs 27,995 crore, according to data from the Ministry of Consumer Affairs, Food and Public Distribution.

RC Ralhan, president of the Federation of Indian Export Organisations (FIEO) said exports from the state have not been impacted as of now. “I do not see much impact in exports because the neighbouring country (Pakistan) which is the only other major basmati rice exporting nation is also equally affected by floods. So, it could lead to better realisations due to limited supply,” he said.

Ralhan added that even after the floodwaters subside, it would take weeks or even months for the farmers to desilt their land and make it ready for the next round of sowing. “The crops that were sown are all ruined in Punjab. So, the impact will be seen in the harvesting season, which is October and November. We will see more procurements from other states like Haryana, Madhya Pradesh, Uttar Pradesh and so on as Punjab’s share is likely to drop during that time,” he said.

FIEO’s Ralhan and Indra Shekhar Singh said the situation could lead to short-term inflation in paddy prices. For the 2024-25 cropping season, Punjab was a top-ranking state in paddy production in India, though its contribution to the central pool was at a lower level than previous years due to shortage in storage capacity.

Agriculture is the backbone of Punjab’s economy as a third of the state’s GDP is farm-dependent, and nearly three-quarters of its population relies on agriculture for livelihood.

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In the 2024–25 kharif season, Punjab accounted for 4.6 percent of India’s total food grain sowing area. Rice dominates the state’s crop profile, with Punjab contributing 7.5 percent of India’s rice area and 12 percent of total rice production last year.