In a significant policy shift aimed at strengthening farmer welfare and improving the efficiency of agricultural marketing, the Kerala government has decided to entrust paddy procurement entirely to cooperative societies. The move marks a transition to a two-tier, farmer-centric procurement system designed to ensure timely purchase of paddy, prevent crop damage, and guarantee faster payments to farmers.

The decision was taken at a high-level meeting chaired by Chief Minister Pinarayi Vijayan in Thiruvananthapuram on Monday, according to a statement issued by the Chief Minister’s Office. The new procurement model will come into force from the upcoming paddy procurement season and is expected to fundamentally change how rice is procured, processed and supplied within the state.

Ending delays, ensuring immediate payments

At the heart of the new system is the government’s objective to eliminate delays that farmers have long faced in receiving payments for their produce. Under the existing arrangement, many farmers depended on Paddy Receipt Sheet (PRS)-based loans to manage cash flow while waiting for procurement payments to be processed. These delays often caused financial stress, particularly for small and marginal farmers.

The government said the revamped system would avoid such dependence by ensuring that farmers are paid immediately at the time of procurement itself. Timely procurement, it added, would also help prevent crop losses caused by delays in harvesting and storage, especially during adverse weather conditions.

“The idea is to make paddy procurement truly farmer-friendly, transparent and efficient, while strengthening the cooperative sector,” officials said, describing the decision as a long-term structural reform rather than a temporary administrative change.

Primary cooperatives to procure directly from farmers

Under the new framework, Primary Agricultural Cooperative Societies (PACS) will play a central role. Societies that are prepared and equipped for procurement will be authorised to purchase paddy directly from farmers at the local level. This decentralised approach is intended to reduce bureaucratic layers and bring procurement closer to the farming community.

By empowering primary cooperatives, the government aims to leverage Kerala’s strong cooperative network, which already has deep roots in rural areas. Officials believe this will improve accessibility for farmers, reduce transaction costs, and foster greater trust in the procurement process.

Nodal cooperatives at district and taluk levels

To manage operations beyond the village level, nodal cooperative societies will be formed at the district or taluk level. These nodal societies will have a broader ownership structure, with shareholding participation from primary cooperatives, padasekhara samithis (paddy farmers’ collectives), and individual farmers.

These nodal cooperatives will be responsible for aggregating paddy procured locally, arranging processing, and ensuring supply to the public distribution system (PDS). Paddy will be processed either in rice mills owned by the nodal societies, mills taken on rent, or private mills engaged for this purpose.

After milling and processing as per the prescribed out-turn ratio, the rice will be supplied to the PDS, which is a critical component of Kerala’s food security system.

Additional income through by-products

One of the notable features of the new model is that by-products generated during processing—such as broken rice, husk and bran—will accrue to the nodal cooperatives. At present, these by-products and associated processing charges largely benefit private mill owners.

By transferring these benefits to cooperatives, the government expects to strengthen their financial viability and ensure that value generated within the supply chain remains within the cooperative ecosystem. This, in turn, could help cooperatives reinvest in infrastructure, improve services, and offer better support to farmers.

Supplyco as nodal agency

The Kerala State Civil Supplies Corporation, popularly known as Supplyco, will act as the nodal agency for paddy procurement under the new system. Supplyco’s role will include coordination, oversight and ensuring that procurement and distribution targets are met in line with state food security requirements.

Supplyco’s involvement is expected to provide continuity with the existing public distribution framework while allowing cooperatives greater operational autonomy at the ground level.

Financial support through Kerala Bank

Recognising that not all cooperatives may have sufficient surplus funds to undertake procurement immediately, the government has announced a comprehensive financial support mechanism. A special financial assistance loan scheme will be rolled out through Kerala Bank to support cooperatives that lack adequate working capital.

In addition, nodal cooperative societies will be eligible for working capital loans from Kerala Bank to meet procurement, processing and operational expenses. Officials said this financial backing is crucial to ensuring smooth implementation, particularly in the initial phases of the transition.

Monitoring through coordination committees and digital portal

To ensure effective implementation and accountability, a district-level coordination committee will be constituted in each district. These committees will be chaired by the respective district collectors and will include representatives from the cooperation, food and civil supplies, and agriculture departments.

Farmer groups, Kerala Bank representatives and nodal cooperatives will also be part of the committees, creating a multi-stakeholder oversight mechanism. The committees will monitor procurement operations, address bottlenecks and ensure coordination among different agencies.

In addition, the government plans to set up a dedicated digital portal to monitor paddy procurement and fund disbursal in real time. The portal is expected to enhance transparency, improve data tracking and enable quicker decision-making.

Long-term vision: ‘Kerala Rice’ brand

Beyond immediate procurement reforms, the government sees this initiative as part of a broader strategy to add value to Kerala’s agricultural produce. In the long term, cooperative branding is expected to bring greater price stability and open up opportunities for value addition.

Officials said the new system could eventually pave the way for launching the state’s own rice brand, tentatively named ‘Kerala Rice’. Such a brand, backed by cooperative production and processing, could help promote locally grown rice varieties, ensure quality standards and improve farmer incomes.

High-level participation underscores importance

The importance of the decision was underscored by the presence of several senior ministers at the meeting. Finance Minister K N Balagopal, Cooperation Minister V N Vasavan, Food Minister G R Anil, Agriculture Minister P Prasad, Water Resources Minister K Krishnankutty and Local Self-Government Minister M B Rajesh attended the discussions.

Chief Secretary Dr A Jayathilak and senior officials from various departments were also present, reflecting the cross-sectoral nature of the reform.

With this move, Kerala is seeking to deepen the role of cooperatives in agriculture, reduce farmer distress, and build a more resilient and self-reliant paddy procurement system. If implemented effectively, the model could become a reference point for other states looking to combine farmer welfare with cooperative-led institutional reform.