The National Agricultural Cooperative Marketing Federation of India (Nafed) has kept kharif oilseeds, pulses and cotton under alert for extending its price support scheme (PSS).
This means that Nafed will procure these crops at the minimum support price (MSP), if the market price of the crops falls below the MSP. PSS is a market intervention mechanism of the government where government agencies procure crops from the market, if the prices fall below the minimum support price (MSP) prescribed by the agriculture ministry for that season.
In order to enable PSS, the agriculture ministry has reverted to its old scheme of full reimbursement of the extra cost borne by procurement agencies such as Nafed and the National Cooperative Consumers’ Federation (NCCF), in procuring the crop at MSP and selling below market price.
However, the proportion of the subsidy reimbursement is yet to be decided. According to a proposal, the government wants a 50:50 sharing of reimbursement costs among states and the Centre and 75:25 for north eastern states. For the past two years, the subsidy reimbursement for Nafed was capped at 15 per cent of the total amount, while the rest is yet to be sorted out between the states and the Centre. Therefore, this time, the government has reinstated the old system without the cap before the start of the procurement season, said sources.
According to sources, Nafed has already started procuring urad dal in Maharashtra under PSS after the prices fell below the MSP of Rs 4,300 per quintal. In some markets, it has even fallen to Rs 2,495-2,600 per quintal. In contrast, in certain markets, it is around Rs 6,000 per quintal.
On the other hand, the Cotton Corporation of India has started procuring cotton from southern markets at the MSP of Rs 3,600-3,900 per quintal, since prices have fallen in these markets below the MSP at Rs 2,700-2,900 per quintal.
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Manufacturers in major pulses growing centres said that the high prices of these commodities have resulted in stagnant demand among bulk buyers as well as retail buyers.
There is hardly any lifting of stock at the markets at these prices. While millers have stocked up inventory, consumers have been managing demand according to the need and not building up inventory. Besides, India has enough stock of imported pulses as well, said a dealer. “Even if there is a demand, it is met with minimum buying,” he added.
According to official sources, from middle of November, tur dal may need to be procured at MSP. Similarly, oilseeds, sunflower and soyabean are also under watch. Recently, Nafed was told to buy the entire market stock of pulses and oilseeds at MSP, if the prices fell considerably. The Food Corporation of India has a similar mandate in the case of rice and wheat.
The official sources said that the 100 per cent reimbursement scheme has recently been notified for copra and similar notifications will follow for oilseeds and pulses. For the kharif season, the government had held back the MSP decision on pulses for 2012-13.