Why MP govt's price scheme not a saviour for horticulture farmers

The Madhya Pradesh Cabinet on Tuesday approved a scheme under which farmers will be compensated if the market price of a crop falls below its minimum support price (MSP). Though it’s a praiseworthy attempt, the Mukhyamantri Bhavantar Bhugtan Yojana (CM's Price Deficit Financing Scheme) doesn’t cover millions of horticulture farmers — many of whom held protests for months to get remunerative prices.

For them, the state government is planning to set up a horticulture price commission to address price fall-related issues and, maybe, fix a minimum price.

Implementing a price deficit payment plan for horticulture crops, nonetheless, is difficult because there is no uniform reference price like the MSP for onions, potatoes or tomatoes.

Last year, around 73 per cent of the one million quintals of onions purchased by the MP government from farmers was destroyed owing to inadequate storage space, the government told the Assembly earlier.

The Mukhyamantri Bhavantar Bhugtan Yojana, as of now, covers eight oilseeds and pulses whose production in 2017 is estimated to be around 14.25 million tonnes (mt). These include soybean, maize, tuar, moong, urad and groundnut. The scheme seeks to compensate farmers by depositing the price difference between the market price and MSP directly into their accounts. However, the compensation won’t exceed the modal price. 

The modal price will be the average market prices for a particular commodity over a two-month period in Madhya Pradesh and two other states where the crop is grown and traded.

Farmers will have to register their crops at village-level cooperative societies along with their Aadhaar and bank account numbers. Enrolments will open from September 11 for a month. 

The compensation will be paid to the farmers’ bank accounts directly after verification of mandi receipts. In June, several parts of Madhya Pradesh saw large-scale agitation from farmers due to a sudden and sharp drop in prices of several commodities, particularly onions and pulses. 

The agitation turned violent when six farmers were shot in Mandsaur district on June 6.

The new deficit price payment scheme is not the first attempt at directly compensating farmers for a price fall, and has been attempted several times earlier. The models might have been different, though.

In 2015, a pilot project of deficiency price payment for cotton growers was started in Hinganghat taluka of Maharashtra. It was called the Direct Payment Deficiency System (DPDS). Under this, farmers were to get the difference between the MSP and market price should the market price fall below the MSP, directly in their bank accounts. The plan to roll out the scheme in other parts of the country couldn’t materialise, as the pilot didn’t show encouraging results.

Even earlier, in 2009-10, a scheme of deficiency price payment for betel nut (supari) farmers was started in Goa’s Ponda. Under this, the state government decided the base price of Rs 100 a kg, and if a farmer sold the betel nuts below the base price, it paid them the difference.

NITI Aayog member Ramesh Chand, in a report in 2015, had also advocated the idea of deficiency price payment in case of price fall, to compensate farmers and also to save the states from the problems of storage and transportation.