Support scheme not helping farmers? Mandi arrivals up, prices below MSP but little procurement so far : 15-10-2018

Though kharif 2018 arrivals have indeed picked up, the newly buttressed price support schemes (PM-AASHA) haven’t yet come to benefit the farmers. A review of market trends by FE showed that the prices of nine summer crops were ruling 11-55% below their minimum support prices (MSPs) between October 1-9, a clear sign that procurement by the designated agencies haven’t kept pace with the plans announced by the government. (See chart).

Rolling out a package of price deficiency support schemes for agricultural crops, the government had announced an extra Budget outlay of over Rs 15,000 crore for procurement of non-National Food Security Act (NFSA) crops during the June 2018-July 2019 crop year. It also enhanced the government guarantee for Nafed to undertake procurement of pulses and oilseeds by Rs 16,550 crore to Rs 45,450 crore for this fiscal.

For as many as 14 crops in kharif 2018, the government had earlier announced MSP hikes in the range of 4-52% in sync with the policy to keep MSPs at 1.5 times the cost.

According to officials, many states have informed the Centre that MSP operations could not be started due to the high moisture content than permissible limits in case of many crops.

Nafed and other agencies will procure crops only if they are of FAQ (fair & average quality) standards, they added.

“It is not surprising to see market prices to be 30-40% below MSPs. The government cannot swim against the forces of demand-supply for too long, and for so many commodities. It will cost the government heavily, will lead to lot of corruption and wastage,” said noted agriculture economist Ashok Gulati. According to Gulati, the policy (PM-AASHA) could finally be shelved. “It is an ill-advised policy, with a high probability to fail,” he said.

If the policy is to be implemented throughout the country and for all crops mentioned therein, then the cost could turn out to be far higher. The NITI Aayog had earlier estimated the total cost of nationwide implementation of Market Assurance Scheme, which involves decentralised procurement and disposal of the stocks by state, at a little over `1.11 lakh crore, assuming that all the 23 crops identified, including wheat and rice, are covered up to 40% of the marketable surplus and that the price loss (difference between farm harvest prices and the minimum support prices) to be eligible for compensation is capped at 25% of the MSPs.

New moong crop, which started arriving from mid-September in many states, was being sold at 29-54% below its MSP of `6,975/quintal during first nine days of the kharif marketing season that began October 1, according to the government’s agmarknet portal. The Centre has asked Nafed to start MSP operations of moong in Karnataka, Tamil Nadu, Telangana, Maharshtra, Uttar Pradesh, Rajasthan and Madhya Pradesh. The procurement has just commenced in Karnataka and Tamil Nadu on a limited scale, Nafed is still discussing the parameters with other state governments, sources said.

During the period under review, soyabean prices in Ujjain, Madhya Pradesh, a major production hub, were 11.44% lower than its MSP at `3,010/quintal. Soyabean production this year is expected to be 13.46 million tonne, up 22.59% from 2017-18. Traders said prices of this oilseed are linked with global edible oil prices while MSP is only one of the factors that influence the rates.

Among the coarse cereals, bajra and jowar ruled 25% and 22%, respectively, below their MSPs during the review period in Rajasthan and Maharashtra — key producer states. Maize prices in Karnataka were 17% below MSP in Haveri district of Karnataka at `1,413/quintal. India’s kharif maize production is expected to touch a record 21.47 million tonne this year.

Ragi prices were down 22% from MSP at `2,256/quintal in Mandya district of Karnataka. Niger seed was sold at `3,788/quintal (down 36% from MSP) in Dindori district of Madhya Pradesh. Farmers were also selling groundnut at 26% below MSPs in Jhansi, Uttar Pradesh and 38.55% below the support price in Shivpuri, Madhya Pradesh. The Centre has asked Nafed to procure Niger seeds in Madhya Pradesh and groundnut in Madhya Pradesh, Rajasthan and Uttar Pradesh, but the MSP operations are yet to begin. Sunflower was also ruling about 30% below MSP in Karnataka, the largest producer, in the review period.

“There was an assumption that market intervention at MSPs will lift the mandi prices. But despite procurement continuing in Karnataka and Tamil Nadu, moong prices are still considerably lower than MSPs. The government has its limitations when it comes to buying agricultural produce,” a state government official involved in procurement operations said, requesting anonymity.

Source : Times of India


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