- Government announces minimum support prices (MSPs) for 24 mandated crops and fair and remunerative price (FRP) for sugarcane on the basis of recommendations of the Commission for Agricultural Costs and Prices (CACP), after considering the views of State Governments and Central Ministries/Departments concerned and other relevant factors.
- Government has announced its historic decision on 04.07.2018 to fix MSP at a level of at least 150 per cent of the cost of production for Kharif crops 2018-19.
- Recent increase in MSP of Kharif crops at a level of at least 150 per cent of the cost of production will ensure remunerative price to farmers.
What is MSP?
- Minimum Support Price is the price at which government purchases crops from the farmers, whatever may be the price for the crops.
- The MSP helps to incentivize the framers and thus ensures adequate food grains production in the country.
- The minimum support prices are announced by the Government of India at the beginning of the sowing season for certain crops on the basis of the recommendations of the Commission for Agricultural Costs and Prices (CACP).
At present, the MSP covers 24 crops that includes
- Seven cereals: paddy, wheat, barley, jowar, bajra, maize and ragi
- Five pulses: gram, arhar/tur, moong, urad and lentil
- Eight oilseeds: groundnut, rapeseed/mustard, toria, soyabean, sunflower seed, sesamum, safflower seed and nigerseed);
- Copra, raw cotton, raw jute and virginia flu cured (VFC) tobacco.
- In case of sugarcane, MSP has been assigned a statutory status and the price announced is called statutory minimum price or Fair Remunerative Price.
- Procurement Price, which is the price at which government procures food grains for buffer stocking and PDS purposes through FCI.
- The major difference between MSP and PP is that while PP is for food grains only,MSP is for 24 crops which includes both food grains and non food grains
- Normally, the procurement price will be higher than the MSP, but lower than the market price.
- The price at which the procured and buffer stocked food grains are provided through the PDS is called as issue price.
- The procurement price is announced soon after the harvest.
- Nodal agency is FCI.
- Increasing MSP is not adequate and it is more important that farmers should get full benefit of the announced MSP. For this, government realizes that it is essential that if price of the agriculture produce market is less than MSP, then in that case State Government and Central Government should purchase either at MSP or work in a manner to provide MSP for the farmers through some other mechanism.
- With this approach, Cabinet has approved the Umbrella Scheme of PM-AASHA with three sub-schemes.
- Pradhan Mantri Annadata Aay SanraksHan Abhiyan (PM-AASHA) launched on on September 12, 2018 aimed towards ensuring remunerative prices to farmers for their produce
- The scheme is expected to complement the increase in MSP which will be translated to farmer's income by way of robust procurement mechanism in coordination with the states.
Three Components of the Scheme
- Price Support Scheme (PSS): In Price Support Scheme (PSS), physical procurement of pulses, oilseeds and Copra will be done by Central Nodal Agencies with proactive role of State governments.
- Price Deficiency Payment Scheme (PDPS): To cover all oilseeds for which MSP is notified. In this direct payment of the difference between the MSP and the selling/modal price will be made to pre-registered farmers.
- Pilot of Private Procurement &Stockist Scheme (PPPS): Participation of the private sector in procurement operations will be piloted.
Price Support Scheme
- In Price Support Scheme (PSS), physical procurement of pulses, oilseeds and Copra will be done by Central Nodal Agencies with proactive role of State governments.
- It is also decided that in addition to National Agricultural Cooperative Marketing Federation of India (NAFED), Food Cooperation of India (FCI) will take up 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
- Under Price Deficiency Payment Scheme this scheme (PDPS), it is proposed to cover all oilseeds for which MSP is notified.
- In this direct payment of the difference between the MSP and the selling/modal price will be made to pre-registered farmers selling his produce in the notified market yard through a transparent auction process.
- All payment will be done directly into registered bank account of the farmer.
- This scheme does not involve any physical procurement of crops as farmers are paid the difference between the MSP price and Sale/modal price on disposal in notified market.
- The support of central government for PDPS will be given as per norms.
Pilot of Private Procurement & Stockist Scheme (PPPS)
- The cabinet also decided that the participation of private sector in procurement operation needs to be piloted
- Therefore, it was decided that for oilseeds, the states will have an option to roll out Private Procurement Stockist Scheme (PPSS) on pilot basis in selected districts and Agricultural Produce Market Committee’s (APMC) of district involving the participation of private stockiest.
- The pilot district and selected APMC(s) will cover one or more crop of oilseeds for which MSP is notified.
- The selected private agency shall procure the commodity at MSP at the notified markets during the notified period from registered farmers in consonance with the PPSS guidelines.
- Sept 2018: The Cabinet raised the price of ethanol for state oil firms by 25 per cent, to help sugarcane farmers.
- In addition to this, budget provision for procurement operations has also been increased and Rs. 15,053 crore is sanctioned for PM-AASHA implementation.
- The scheme has been framed on the lines of Bhavantar Bhugtan Yojana, Madhya Pradesh government’s scheme to protect the interests of oilseed farmers in the state.
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