No private sector’s involvement in crop procurement under MSP

No private sector’s involvement in crop procurement under MSP

 

Context:

Recently, the Union Agriculture Ministry decided to remove  “Private Procurement and Stockist Scheme” (PPPS) from the revamped PM-Aasha (Annadata Aay Sanrakshan Abhiyan) scheme, to prevent private sector’s involvement in crop procurement under the minimum support price (MSP) system.

 

Relevance:

GS-02 (Government policies and interventions)

 

Key Highlights:

• Removal of PPPS:

1. 1. • The scheme was introduced in 2018 to allow private sector participation in oilseeds procurement at select pilot locations. But it lacked  government and states support.
      • Owing to the lack of interest shown by the states and the government, the PPPS was removed from the PM-ASHA scheme.

• Revamped PM-Aasha Scheme:

1. 1. • Under the revamped PM-Aasha scheme, states can now apply the Price Deficiency Payment Scheme (PDPS), not only for oilseeds and pulses but also for vegetables.
      • The PDPS compensates farmers by paying up to 15% of the difference between the market price and the government-set price for crops.

• Bhavantar Model for Vegetables:

1. 1. • States are allowed to adopt the “Bhavantar” model for vegetable crops, similar to its earlier application in oilseeds.
      • This model will ensure that up to 15% of the price difference between market rates and government-set prices is paid to vegetable farmers, preventing them from losses due to fluctuating market prices.

• Market Intervention Pricing:

1. 1. • For vegetables, while there is no MSP, states have been setting market intervention prices. If mandi prices fall below these levels, the government will intervene to stabilize prices and ensure farmers are compensated.

• Reasons for PPPS Shelving:

• • • PPPS was removed due to a lack of state interest and the absence of a mechanism to handle the disposal of procured crops.
    • The Centre had initially promised to reimburse up to 15% of the MSP to private agencies along with a 1% administrative cost, but states found the PDPS and PSS (Price Support Scheme) to be more efficient alternatives.

 

About Pradhan Mantri Annadata Aay SanraksHan Abhiyan (PM-AASHA):

• The scheme aims to provide to guarantee remunerative prices to the farmers for their produce.
• It had 3 components and the option was given to the states to decide what they want to implement. With the current removal of PPPS, there remains only two.
  • Price Support Scheme (PSS):
    • The central nodal agency alongside state governments, undertake the procurement of pulses, oilseeds, and copra physically.
    • Food Cooperation of India (FCI) along with National Agricultural Cooperative Marketing Federation of India (NAFED) handles PSS operations in states/districts.
    • The procurement expenditure and losses due to procurement will be borne by Central Government as per norms.
• Price Deficiency Payment Scheme (PDPS):
  • Under PDPS, all oilseeds are covered for which MSP is notified.
  • The difference between the MSP and the selling/modal price will be directly paid to the pre-registered farmers in the notified market yard through a transparent auction process.
  • The payments will be directly done to the registered bank accounts of the farmers.
  • This scheme does not involve any physical procurement of crops, as farmers are paid the difference between the MSP price and the Sale/modal price on disposal in the notified market.
• Pilot of Private Procurement and Stockist Schemes (PPPS): (Recently REMOVED)
  • In addition to PDPS, states were given options to roll out PPSS on a pilot basis in selected APMCs of districts involving the participation of private sector.
  • It aimed to allow private players to participate in the procurement of crops.