Market Assurance Scheme for Rural Farmers to Provide Minimum Support Price (MSP ) for Crops

Published Date - 14 February 2018 07:37:50

The central government, in consultation with states, proposes to launch a new price support scheme for farmers to prevent distress sales at prices below the minimum support price (MSP).

Under the proposed “market assurance scheme”, states will be free to procure all crops from farmers for which MSPs are announced, except rice and wheat, which are already being procured by the centre for the public distribution system.

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.

This scheme will not allow the state govt. to procure rice and wheat which is already procured by the Central govt. for Public Distribution System (PDS). Moreover, the state govt. will have the responsibility to dispose off their procured crops.

This price support scheme will help the rural farmers to get at-least their MSP for crops in case the prices of the commodity falls. Furthermore, this scheme will strengthen the procurement process of crops and will further ensure that farmers are not going to suffer due to market inefficiencies.

Market Assurance Scheme

The important features and highlights of this scheme are as follows:-

  • State govt. are free to procure all crops (excluding wheat and rice) when the wholesale prices falls below MSP.
  • This price support scheme will benefit rural farmers and prevent their distress sales.
  • Subsequently, state govt. will have the authority to decide which crop they should procure and in which quantities. This scheme will also tackle the problems of improper functioning of agricultural markets.
  • Moreover, state govt. will have the ownership rights to use these crops wherever they want. They can use it in mid day meals to provide nutritious food to the children ore even can sell these crops in an open market.
  • In addition to this, Central govt. will compensate states up to 30% for their procurement losses.
  • Furthermore, this scheme will improve the agricultural marketing system to provide MSP to the farmers.

Need for Market Assurance Scheme

Central govt. proposes this scheme after the record production of various crops (cereals and pulses) in 2016-17 which has led to the trashing of the wholesale prices below MSP. Moreover, lack of competition, un-ordered price discovery and lack of cartels (organizations to limit competition) are major causes of price distortion. So the farmers are helpless in selling their crops at great losses. Accordingly, farmers demands for their sustainable crop prices and loan waivers.

Some states like Uttar Pradesh, Maharashtra, Punjab and Karnataka has started Farm Loan waivers and Madhya Pradesh has launched its own price support scheme (Bhavantar Bhugtan) to help farmers. However, this scheme of Central government will help all the farmers to a great extent across the country.



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