To prevent farmers from distress sales of their produces below the minimum support price (MSP), the Ministry of Agriculture in consultation with State Governments will launch a "market assurance scheme", with a corpus fund of Rs 500 crore.
Under this scheme, States and Union Territories will be free to procure all crops from farmers if the prices fall below the minimum support price except rice and wheat, which are already being procured by the centre for the public distribution system.
A concept note has been finalized to this effect. The proposed scheme will strengthen procurement and ensure farmers do no suffer from marketing inefficiencies.
The proposed scheme will ensure an assured price for the farmer, mitigating the price risks faced by farmers after harvest. Together with a prolonged spell of inadequate rains and two years of drought it has contributed towards rural distress.
As per the proposal, the ownership of the Market Assurance Scheme (MAS), including the decision to procure at MSP, and its actual operation will be vested with states. States will procure crops (except wheat and paddy) at the MSP, as notified by the Government of India, if prices fall below it.
Keeping in view the limitation of financial resources with states and procuring agencies, the government is planning to initially create a central corpus fund of Rs 500 crore for providing interest free advances towards working capital to states to enable them make revolving fund at state level. The proposed scheme comes against the backdrop of a record harvest of cereals and pulses in 2016-17, which led to wholesale prices plunging below MSPs.
The price crash has led to protests by farmer groups across the country since June, with demands for remunerative crop prices and loan waivers. While states such as Uttar Pradesh, Maharashtra, Punjab and Karnataka have announced farm loan waivers that are at different stages of implementation, states like Madhya Pradesh have launched their own price support schemes for farmers growing pulses and oilseeds.
According to sources, States will decide when to begin procurement and enter the market and start procurement through their own public sector agencies or through other empanelled or authorised private agencies or central procuring agencies. States will be responsible to deal with and dispose of the procured commodities in an appropriate manner.