Central Govt. plans New Crop Procurement Scheme for Farmers to ensure Minimum Support Price(MSP)

Published Date - 04 April 2018 06:20:31 Updated Date - 04 April 2018 06:21:54

The Government policy of procurement of Food grains has broad objectives of ensuring MSP to the farmers and availability of food grains to the weaker sections at affordable prices. It also ensures effective market intervention thereby keeping the prices under check and also adding to the overall food security of the country. 

Following consecutive years of record harvest, low crop prices, and protests by farmers, the centre is looking at a combination of schemes to ensure that growers get the benefit of government-announced minimum support prices (MSP).

FCI, the nodal central agency of Government of India, along with other State Agencies undertakes procurement of wheat and paddy under price support scheme . Coarse grains are procured by State Government Agencies for Central Pool as per the direction issued by Government of India on time to time. The procurement under Price Support is taken up mainly to ensure remunerative prices to the farmers for their produce which works as an incentive for achieving better production. 

Before the harvest during each Rabi / Kharif Crop season, the Government of India announces the minimum support prices (MSP) for procurement on the basis of the recommendation of the Commission of Agricultural Costs and Prices (CACP) which along with other factors, takes into consideration the cost of various agricultural inputs and the reasonable margin for the farmers for their produce. 

Following the budget announcement earlier this month, the centre’s think tank Niti Aayog is likely to propose a road map with a combination of standardized schemes, a top agriculture ministry official said on Friday on condition of anonymity.

To facilitate procurement of food grains, FCI and various State Agencies in consultation with the State Government establish a large number of purchase centres at various mandis and key points. The number of centres and their locations are decided by the State Governments, based on various parameters, so as to maximize the MSP operations. For instance for Wheat procurement more than 17,000 procurement centers were operated during RMS 2017-18 & for Rice procurement more than 44,000 procurement centres were operated in KMS 2016-17. Such extensive & effective price support operations have resulted in sustaining the income of farmers over a period and in providing the required impetus for higher investment in agriculture sector for improved productivity. 

Whatever stocks which are brought to the Purchase centers falling within the Government of India’s specifications are purchased at the fixed support price. If the farmers get prices better than the support price from other buyers such as traders / millers etc., the farmers are free to sell their produce to them. FCI and the State Government/its agencies ensure that the farmers are not compelled to sell their produce below support price.

Under the new scheme, the centre will compensate states for any losses capped at 30% of the procurement cost. It will be the states’ responsibility to dispose of the procured crops.

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.

Crop Procurement Scheme

Central govt. has already prepared the mechanism and is going to discuss it in the cabinet meeting on 4 April 2018. This new scheme involves 3 mechanisms which are described as follows:-

  • Market Assurance Scheme (MAS) – This scheme involves decentralized procurement of crops i.e purchase and disposal of crops by state agencies. For more details on MAS, click – Market Assurance Scheme for Price Support
  • Price Deficiency Payment Scheme (PDPS) – This scheme provides compensation to the farmers as per the MSP rates. PDPS Scheme is similar to Bhavantar Bhugtan Scheme of Madhya Pradesh govt. where farmers get price deficit.
  • Private Agencies Involvement – Central Govt. will involve private agencies to procure crops at MSP.

Most of the states favours MAS but states are free to choose PDPS and also involve private agencies for procurement. Market Assurance Scheme will replace Private Support Scheme (PSS) and will cover all 23 crops. Through MAS, state govt. can directly procure farmers produce and credit MSP directly into their bank accounts. Central govt. will bear cost of expenditure (max. 15%).

Cabinet committee will decide the extent of support to the loss and overall sharing of costs. Bihar, Gujarat, Haryana, Jharkhand, Karnataka, Rajasthan, Uttarakhand, Tamil Nadu favours MAS while Madhya Pradesh favors PDPS. Central govt. will provide opportunity to the state govt. to opt either of the 2 schemes or both depending on their choice of crops.



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