Horticulture price stabilisation scheme might receive lukewarm response

Nominated agencies Nafed and NCCF not to participate due to 100% profit sharing and CAG audit clauses, SFAC to procure 10k tonnes potato and 6k tonnes onion with own corpus

The government’s plan to damp volatility in the prices of horticultural commodities, especially onion and potato, through a Price Stabilisation Fund with a corpus of Rs 500 crore, is likely to receive a lukewarm response from the agencies supposed to implement it.

The latter are apprehensive over the draft guidelines calling for entire profit sharing with the government and scrutiny by the Comptroller and Auditor General (CAG).

The draft guidelines name three bodies — National Agricultural Cooperative Marketing Federation of India (Nafed), National Consumer Cooperative Federation of India Ltd (NCCF) and Small Farmers Agri-business Consortium (SFAC) — for getting an interest-free working capital advance. Additionally, state governments, state agencies such as civil supplies corporations, and marketing boards are entitled to apply.

Two of the three central government bodies, Nafed and NCCF, have said they are not keen to participate. SFAC is planning to procure a negligible 10,000 tonnes of potato and 6,000 tonnes of onion this season, beginning February, through its own corpus. SFAC doesn’t wish to take working capital from the government.

The guidelines say losses, if any, incurred by the central government agencies, on account of interventions under this scheme, will be met out of this fund. However, such losses in the case of interventions by state government agencies will be met to the extent of 50 per cent (75 per cent for northeast states) only.

Profits, the draft guidelines say, earned on interventions will go back to the fund entirely from central agencies and 50 per cent with state government agencies (75 per cent for northeast). There will be a Price Stabilisation Fund Management Committe, headed by the agriculture secretary.

"Why should we share our profits with the government? Instead we will raise our own corpus and procure as lots of traders are willing to sell onion and potato directly to us," said Virendra Singh, Chairman, NCCF.

Nafed chairman V R Patel had earlier categorically denied participation in this scheme.

SFAC, meanwhile, is planning to set up procurement centres each in Nashik (Maharashtra), Agra (Uttar Pradesh), Indore and Rajasthan. It will also build up storage facilities in these centres for supply of commodities in peak demand season.

Interestingly, the guidelines limit administrative expenses at 1 per cent of the working capital fund and also allow agencies to forecast selling prices for 2-6 months along with procurement price proposed to be paid in absence of the minimum support price (MSP).

When quizzed about the system of intervention may be termed as hedging, the SFAC official said, "That I don't know. It is the government's scheme and extremely workable."

Being nodal agency, SFAC will have to intervene as per government orders, the official added.