Successive governments have relied on public procurement to stabilize prices, support farmers’ incomes and ensure reliable supplies for the Public Distribution System (PDS). However, in recent years, large-scale purchases, especially of rice and wheat, have outstripped basic food security needs, resulting in chronically high reserve stocks and rising operating costs.
At the same time, India remains structurally dependent on imports of edible oils, pulses and some raw materials.
The Economic Survey 2025-26, tabled in Parliament on Thursday, made crop diversification a policy priority and argued that India’s production model must shift from an over-concentration of rice and wheat towards pulses, oilseeds and other crops that are better aligned with consumption needs, resource sustainability and reducing imports.
Mint explains why a voluntary approach, supported by targeted incentives and funded by efficiency gains within the existing system, is now preferred over changing the MSP (minimum support price) or weakening public procurement.
Why is it necessary to diversify the cropping cycle of wheat and rice?
The continued dominance of the wheat-rice cycle has created economic, environmental and fiscal pressures.
Rice cultivation is highly water-intensive, contributing to groundwater depletion, soil degradation and higher energy consumption, particularly in northwestern India. At the same time, the limited choice of crops exposes the farmer to income stagnation.
Procurement also expanded rapidly. An estimated 30.03 million tonnes of wheat was procured during the 2025-26 rabi marketing season, according to official data. In terms of paddy rice, 83.2 million tonnes of paddy was procured during the 2024-25 Kharif marketing season, while 66.7 million tonnes of paddy was procured during the ongoing 2025-26 season till January 29, 2026.
According to Food Corp. of India (FCI) total stock of foodgrains (wheat and rice) in the central pool as on January 1, 2026 stood at 58.4 million tonnes, up by about 10.9 million tonnes from the same period last year.
Large-scale production and buying led to excess inventories and rising storage costs, intensifying fiscal pressures. According to experts, overpurchasing creates excessive inventory that stays in inventory longer, increases warehouse rent, interest on freight charges, handling and shipping costs, and losses from spoilage and waste. Together, these higher storage, maintenance and financing costs significantly increase the government’s fiscal burden.
“Excess stocks increase storage, handling and interest costs and strain public finances. Assuming stocks are held for one year, then the annual cost of transporting food grain stocks for FCI is approx. ₹2,400 per ton, or thereabouts ₹200 per tonne per month… So it ultimately burdens the exchequer,” said G. Chandrashekhar, an agricultural economist who was part of the World Bank-Government of India (ICAR) National Agricultural Innovation Project.
What crop options can replace or supplement paddy and wheat?
India remains structurally dependent on imports of edible oils, pulses and some raw materials.
India produced 25.6 million tonnes of pulses in FY25 and imports around 5-7 million tonnes annually to meet domestic demand, according to official data. The current consumption of edible oil is 25-26 million tonnes, while domestic production is about 11 million tonnes. The remaining 60% comes from imports.
The country imports edible palm oil from Indonesia and Malaysia, soybean oil from Argentina and Brazil, and sunflower oil from Russia and Ukraine.
This shows that India faces significant import dependence of both edible oils and pulses, with more than 60% of edible oils and a significant amount of pulses imported in 2024–25, namely 16.4 million tonnes of edible oil and 7.3 million tonnes of pulses.
These gaps create an opportunity to align farm support with changing consumption patterns, environmental sustainability and national self-sufficiency while fully preserving the food security architecture.
Which regions are suitable for the initial phase?
The initial phase may focus on eastern and central regions where rainfall, soil conditions and market access make pulses, oilseeds and maize economically and agronomically viable.
“Regions that are strategically critical to national food security may be incorporated at later stages once the approach is tested and refined,” the Economic Survey 2025-26 states.
In large parts of eastern India, maize, pulses and oilseeds lend themselves naturally to existing cropping systems. In the central regions, oilseeds such as gram and soybean are well suited to the prevailing rainfall and soil conditions.
These crops directly support national priorities: pulses and edible oils reduce import dependency, while maize and oilseeds contribute to the extension of the ethanol, livestock and bioenergy value chain.
For example, Punjab and Haryana are pursuing crop diversification to address groundwater depletion and over-reliance on MSP procurement for paddy wheat, while improving farm incomes and ensuring long-term agricultural sustainability.
Why focus on incentives rather than SMEs or procurement changes?
Price support and income support policies remain essential as farm incomes are sensitive to weather shocks, market volatility and rising input costs. Small and marginal farmers have limited resilience and weak bargaining power.
According to the Economic Survey 2025–26, instead of changing maritime spatial planning or weakening procurement, a calibrated strategy can use savings from better inventory management to support voluntary crop diversification.
Farmers may be offered financially attractive alternatives for part of their rice and wheat acreage, especially in regions where purchase volumes are high, but farm profitability remains modest and agro-ecological conditions favor other crops.
Diversification missions at the state level would be carried out through structured centre-state partnerships. The Centre’s contribution would come from procurement, storage and interest savings, while states would finance their share from ancillary gains such as reduced input subsidies and existing incentive frameworks for sustainable agriculture.
Transitional funding could be provided if needed, contingent on verified acreage exchanges and subsidy savings, the survey added.
How can farmers’ incomes be protected during the transition?
The survey pointed out that so that diversification does not put farmers at risk of income, per cent or per acre incentives can compensate for yield differences and transition costs.
Modest bonuses can make alternative crops more financially attractive than continued monoculture of rice or wheat, especially when combined with lower input costs of water, fertilizer and energy.
These incentives can be financed from the fiscal savings created by reducing the accumulation of excess stocks and related carrying costs, making the approach fiscally neutral while remaining farmer-focused.
Part of the savings should also be reinvested in post-harvest and value chain infrastructure such as oilseed processing, pulse milling, maize drying and ethanol linkages, using public-private partnerships and the Agri-Infrastructure Fund.
Research institutions and agricultural universities can support the transition by providing region-specific seed and agronomy packages as part of an integrated diversification framework.
Leveraging the efficiency of the existing public procurement system to fund voluntary agronomy-led diversification offers a practical way to increase farmers’ incomes, ease fiscal pressures and strengthen long-term food and nutrition security.
