To ensure that farmers get minimum support price (MSP) of 1.5 times of production costs for their crops, the NITI Aayog is working on three concepts. The concepts are market assurance scheme (MAS), price deficiency procurement scheme (PDPS) and involvement of private procurement and stockist scheme.
Finance Minister Arun Jaitley had announced in the budget that the Government will pay 50 percent over and above input cost to farmers. While Niti Aayog is working on devising method to implement this, the parliamentary committee on agriculture has said that the fixing of minimum support price without proper arrangements for procurement of agriculture produce would not be able to solve the plight of farmers in the country.
The committee further said that the Government should exclude brokers and adopt liberal financing pattern for the implementation of its proposed schemes to ensure that farmers get minimum support price (MSP) for their crops.
Sources said that the first concept is Market Assurance Scheme (MAS) under which States would be free to procure from farmers all crops for which MSP is announced. MAS also propose procurement by States and compensation of losses upto certain extent of MSP after the procurement and price realisation out of sale of the procured produce.
“The second option is price deficiency procurement scheme (PDPS) in which if the sale price is below a modal price then the farmers may be compensated to the difference between MSP and actual price subject to a ceiling which may not exceed 25 percent of the MSP. The third concept is a involvement of private procurement and stockist scheme, which relates to procurement by private operators at MSP and Government providing some policy and tax incentives and a commission to such private entities.,” sources said.
Officials say that farmers would not be benefitted from hiking in MSP by ) to 1.5 times of production costs to their crops until the government introduce several reforms that include e-NAM, contract farming, implementation of APMC act, linking farmers with market, improving supply chain and processing capacities and Agri startups.The government in the Budget for 2018-19 last month announced that it will fix the MSP of Kharif 2019 crops at least 1.5 times than the cost of production. Following up from this, the Union Cabinet last week doubled state purchases of oilseeds and pulses from farmers and approved the regularisation and extension of Government guarantee provided to lender banks for providing credit limit to National Agricultural Cooperative Marketing Federation of India (NAFED). The limit was extended to Rs 19,000 crore from the earlier limit of Rs 9,500 crore for undertaking procurement operation of pulses and oilseeds under the Price Support Scheme (PSS) and to the Small Farmers Agri-Business Consortium (SFAC) for Rs 45 crore for meeting their existing liability and settlement of extant claims.
Earlier , the NITI Ayog in its report on MSP had pointed out that 81 percent of the cultivators are aware of MSP fixed for different crops. “At least 10 percent of the farmers who were aware of MSP, came to know about it before the sowing season whereas 62 percent of them came to know about MSP after the sowing season. Finally, 28 percent of the farmers, although knew about the MSP, they were not able to recollect whether MSP was declared before or after the sowing season,” it said. The report highlighted intermediaries are quite common owing to the non-existence of mandis/market places for paddy.
“In Uttarakha nd farmers got to know about it only after the sowing season. In Uttar Pradesh the farmers were aware about MSP but none of them knew it before the sowing season. According to the Government functionaries, the declaration was done before the sowing season Tamil Nadu: It was revealed from the field investigation that the MSP,”the NITI Ayog report said.
Interestingly, a parliamentary committee, headed by BJP MP Hukum Dev Narayan Yadav in its report on agriculture has stated that MAS is being proposed as a decentralised scheme for procurement of pulses, oilseeds and coarse grains produced in respective states whose MSP are declared by the central government. The Centre will reimburse states for up to 40 per cent of losses incurred by the State agencies, it added.
Similarly, the report said that the PDPS envisages direct payment of the difference between the MSP and the selling price to farmers selling his produce in the APMC yard through a transparent auction process. The report further said that that the proposed funding pattern of MAS and PDPS scheme (PDPS) may strain financial resources of State Government concerned “The centre should adopt a more liberal financing pattern for the implementation of its proposed schemes to ensure that farmers get minimum support price (MSP) for their crops,” it said.
According to agriculture ministry, MSP for 24 agricultural commodities of Kharif and Rabi season are announced by the Government based on the recommendations of the Commission for Agriculture Cost and Prices (CACP). However, procurement by Central and State Agencies is limited to rice and wheat and some amount of coarse cereals. The government also procures limited quantity of oil seed and pulses through NAFED, SFAC and some other agencies. The market intervention scheme (MIS) is implemented in case of the prices falling below the threshold level in perishable crops.