To help small and marginal farmers, who do not have capacity to hold their produce in warehouses and wait for better prices, the Centre plans to incentivise them under a scheme likely to be named PM-Kisan Bhai (Bhandaran Incentive) scheme.
The Agriculture Ministry’s 10-day deadline to receive feedback ended Friday after a concept paper was published and the scheme is likely to be rolled out by December-end.
This is seen as an attempt to break the monopoly of traders in deciding prices of crops. Kisan Bhai is expected to empower farmers, allowing them to retain their crops for a minimum of three months post-harvest. This initiative grants farmers the autonomy to decide when to sell, in contrast to the current practice where most crops are sold during the harvesting season, typically spanning 2-3 months, with traders and stockists controlling supplies throughout the off-season.
According to the concept paper, though the pledge finance facility is available to farmers now, its outreach is constrained owing to high carryover cost on the farmers and credit risk to the bankers.
In the first phase, the scheme may be implemented on pilot basis in Andhra Pradesh, Assam, Madhya Pradesh, Maharashtra, Rajasthan, Tamil Nadu and Uttar Pradesh with an estimated expenditure of ₹170 crore in three years including current fiscal, an official said.
“In order to address these constraints, there appears to be a strong need for incentivising storing of farmers’ produce in scientifically built warehouses and further reducing the interest rate on pledge finance availed against a secured instrument of e-Negotiable Warehouse Receipts (eNWRs) through Prompt Repayment Incentive (PRI) on trading such eNWR via e-National Agriculture Market (e-NAM) platform or other registered e-trading platforms interoperable with e-NAM,” the Agriculture Ministry said.
There are two components of the proposal — Warehousing Rental Subsidy (WRS) and PRI. Small and marginal farmers as well as farmer producer organisations (FPOs) will be eligible to avail WRS benefit at ₹4 per quintal per month irrespective of rate of warehousing (storage) rental charges and also whether charged per quintal basis or area basis by warehouse operator.
But the government has proposed the storage incentive will be provided for maximum period of three months. Besides, the produce stored for 15 days or less will not be eligible to avail the subsidy. The storage incentive will be calculated on day to day basis.
“After wheat harvesting is completed in May-June, the supplies are regulated from July onwards by traders until the next crop arrives. The government by limiting the incentive for three months, will transfer the power to stockists from October, when festival season starts, as farmers will be forced to liquidate by before October,” said S K Singh, an agriculture expert.
Under PRI, the government proposes to extend the 3 per cent additional interest subvention under Kisan Credit Card (KCC) scheme so that farmers can pledge their produce and get a loan at subsidised interest rate. “All KCC holder farmers will be eligible for prompt repayment incentive @3 per cent lesser interest rate for three months on stocking their produce with registered warehouses, availing digital finance against eNWR and trading via eNAM,” it said.
Once farmers get desired monetary support for storage during harvesting season they will be in a position to refuse the buyer dictated prices, the official said. By promoting e-NWR trade through online poratl e-NAM, farmers will get access to large number of buyers across the country, the official said adding, they will be able to sell the produce even if it is in a warehouse by using the e-NWR on the online platform.
However, a commodity market analyst said that the success of the scheme depends a lot on the response of the buyers as they will still be the key influencer on prices because of their large capital base in the agri value chain. If they do not show the desired interest to buy through the online portal, the farmers will again have to return to the agri market yards (mandis), the analyst said and added that a new beginning will be made if farmers become the decision makers.