Calling for a ‘serious rethink’ of the way in which minimal assist costs (MSPs) are at present being offered to farmers, Ramesh Chand, member, Niti Aayog on Wednesday proposed deficiency worth cost (DPP) system as an alternative choice to procurement of crops from mandis at MSPs.
Under the DPP system, which is already tried in Madhya Pradesh, farmers are compensated for the distinction between the MSPs for choose crops and their mandi worth.
“MSP regime should continue as long as markets become competitive and efficient, but it should be given through means other than physical procurement of crops,” Chand mentioned at a convention right here.
He cited DPP as one such technique of offering MSP to farmers whereas cautioning that DPP can’t be stopped as soon as applied. “Madhya Pradesh had experimented with the DPP earlier while Haryana is currently in the process of rolling it out for few commodities,” Chand mentioned at a convention on ‘Getting Agricultural Markets Right’.
He acknowledged that the price of giving MSP is 35% which suggests that the federal government incurs expenditure of `35 for guaranteeing `100 value of MSP funds to farmers.
Physical procurement of crops at MSP is dear for the federal government given the necessity to buy them at charges which can be not less than 50% above paid-up prices, the bills incurred on transportation and storage. Open market gross sales assist recoup the losses, however solely to a small extent.
“MSP remains a justified means currently, due to the continuing presence of market failures, volatility of prices and sudden supply gluts,” Chand advised FE on the side-line of the convention organised by ICRIER and NSE.
In November final 12 months, Prime Minister Narendra Modi had introduced repeal of the three farm legal guidelines earlier handed by the parliament. Modi had then acknowledged that the federal government would type a committee to debate how the system of MSP could possibly be made more practical.
Besides a authorized assure for MSP, one of many key calls for of the farmers who staged protests in opposition to farm legal guidelines was that MSP be offered to all agricultural commodities.
The high-level committee on restructuring of FCI chaired by Shanta Kumar in 2015 had acknowledged that solely 6% of the nation’s farmers get good thing about MSP declared by the federal government.
The MSP regime, as an govt order, was launched within the Nineteen Sixties for encouraging farmers within the ‘Green Revolution’ area in Punjab, Haryana and western Uttar Pradesh for larger manufacturing of rice and wheat for assembly meals scarcity within the nation.
Based on the advice of the Commission for Agricultural Costs and Prices (CACP), the federal government fixes MSP of 22-23 crops grown in each Kharif and Rabi seasons. However, by way of procurement, the Food Corporation of India together with state businesses buy round 60 to 70 million tonne of rice and wheat from the farmers yearly.
Rice and wheat are procured from farmers largely from grain surplus states similar to Punjab, Haryana, Rajasthan, Madhya Pradesh, Chhattisgarh, Odisha, Andhra Pradesh and Telangana. Grains are equipped to states for distrbution below the general public distribution system and for sustaining buffer shares.
The farmers’ cooperative NAFED procures pulses from farmers for guaranteeing buffer shares and when costs fall under MSP. Subsequently these pulses shares are bought within the open market via a tendering course of.
In case of oilseeds, NAFED has been mandated to buy crops similar to mustard, soyabean and groundnut offered the costs fall under MSP below the Price Support Scheme of the agriculture ministry. However, due to sturdy demand, oilseeds costs are ruling a lot above MSP.
NAFED additionally carries out procurement operations on request of states for Copra.
The Cotton Corporation of India commences procurement operations from farmers when mandi costs fall under the MSP.
Source: www.financialexpress.com”