New procurement policy okayed for MSP to farmers

Ensuring good remunerative prices to the farmers, the Union cabinet on Wednesday approved a new procurement policy to benefit farmers under two major schemes.

New procurement policy okayed for MSP to farmers
New procurement policy okayed for MSP to farmers

Ensuring good remunerative prices to the farmers, the Union cabinet on Wednesday approved a new procurement policy to benefit farmers under two major schemes. While one of the schemes will focus on compensating them with oilseeds if rates fall below the minimum support price or MSP, the other will allow states to rope in private players for procurement.

The cabinet has also raised the procurement price of ethanol derived from 100 per cent sugarcane juice and used for blending with petrol by 25 per cent to Rs 59.13 per litre from the current rate of Rs 47.13. This will provide better returns to sugarcane farmers and cut surplus sugar production. The surplus situation has resulted in the sweetner prices crashing in the market forcing the sugar mills delay payment to cane farmers.

Under the new MSP policy, the government fixes the rates for 23 notified crops grown in kharif and rabi seasons. Keeping an eye on the 2019 polls, the government has also announced the Rs 15,053-crore procurement policy, allowing states to choose a compensation scheme and rope in private agencies for procurement to ensure a profitable price to the farmers.

Giving a major boost to the pro-farmer initiatives, the cabinet, chaired by Prime Minister Narendra Modi, took the decision and announced a new umbrella scheme — Pradhan Mantri Annadata Aay Sanrakshan Abhiyan  or PM-AASHA. The decision came with a foolproof new mechanism for ensuring right prices to farmers, following a promise made in the budget this year and the government fixing higher MSPs for rain-fed kharif crops in July to ensure that farmers receive 50 per cent returns over costs of production.

The government had earlier asked the Niti Aayog to suggest a mechanism in consultation with the union agriculture ministry and states. “The PM-AASHA is aimed at ensuring remunerative prices to the farmers for their produce as announced in the Union Budget for 2018. This is a historic decision,” Agriculture minister Radha Mohan Singh said.

The Cabinet has sanctioned Rs 15,053 crore to implement the PM-AASHA in the next two financial years, of which Rs 6,250 crore will be spent this year. Apart from this, the credit line for procurement agencies has been enhanced by providing additional government guarantee of Rs 16,550 crore, taking the total to Rs 45,550 crore.

“Under the PM-AASHA, states would be allowed to choose from three schemes — PSS, newly designed PDPS and the PPSS, which  will undertake procurement when prices of commodities fall below the MSP level,” the minister added.

According to the scheme details put out by the government, while direct procurement or the PSS scheme will kick in when prices of pulses, oilseeds and copra fall below MSP, the PDPS scheme will be available only for oilseeds where registered farmers will directly receive payments in their bank accounts when they sell at prices lower than MSP. Under PDPS the government will not undertake physical procurement of crops. “Both PDP and private players’ participation will be exclusively for oilseeds because the government wants to bring down the country’s import dependence on cooking oils”, a source said.

Food Corporation of India (FCI), the government’s nodal agency forprocurement and distribution of foodgrains, already procures wheat and rice at MSP for supply through ration shops and welfare schemes. The Centre also implements market intervention scheme (MIS) for procurement of those commodities, which are perishable in nature and are not covered under the MSP policy.

India imports around 14-15 million tonnes of edible oils annually, which is around 70 per cent of the domestic demand. According to government estimates, during financial years 2010-14 total procurement was Rs 3,500 crore only whereas during financial years 2014-18, it rose 10 times and reached to Rs 34,000 crore. “For procurement of these agri-commodities during 2010-14, the government guarantee of Rs 2,500 crore was provided with expenditure of only Rs 300 crore; while during 2014-18, the guarantee amount has been increased to Rs 29,000 crore with expenditure of Rs 1,000 crore,” it added.