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CACP suggest Centre to introduce price deficiency payment scheme

In a bid to ensure farmers benefit from minimum support prices (MSP), the Commission for Agricultural Costs and Prices (CACP) has suggested that the Centre explore the possibility of implementing the price deficiency payment (PDP) scheme across the country.

Madhya Pradesh had implemented such a scheme — the Bhavantar Bhugtan Yojana (BBY) — on a pilot basis during last year’s kharif season to safeguard farmers from price fluctuations.

Earlier this week, the Centre announced a 4-52 per cent increase in MSP for kharif crops over last year.

In its non-price recommendations for Kharif 2018, the CACP said a system should be brought in place to ensure MSP for farmers, wherein the difference between the MSP and average market price in the APMC (Agricultural Produce Market Committee) yards is directly paid to farmers’ bank accounts.

Minimising intervention
Such a move will minimise government intervention in procurement. Besides, it will help curb foodgrain losses due to lack of adequate storage, as farmers will be selling their produce directly to traders under the scheme.

The CACP observed that the BBY scheme had helped the MP government reduce its costs to about 17.85 per cent of what was incurred on procurement at MSP in the previous year. Therefore, the Centre should look at implementing the scheme pan India, the CACP said, adding that more crops should be included under such schemes.

Further, to instil confidence among farmers on procurement of their produce, a ‘right to sell at MSP’ legislation may be introduced, the CACP suggested.

“The BBY scheme in MP could benefit only 23 per cent of production, casting a shadow on how it will benefit the majority of farmers if it is scaled up to an all-India level,” observed agriculture economist Ashok Gulati and his colleagues in a working paper at the Indian Council for Research on International Economic Relations (ICRIER).

They also said that the BBY was prone to manipulation by traders and lower-level market functionaries and may end up helping them rather than the farmers.