Agri Business

NCDC earmarks ₹25,000 crore for MSP operations by co-op societies

T V Jayan New Delhi | Updated on October 20, 2020 Published on October 20, 2020

National Cooperative Development Corporation (NCDC), under the Agriculture Ministry, has earmarked ₹25,000 crore for MSP (minimum support price) operations during the current kharif season, which is 21 per cent more than last year.

Cooperatives use this short-term loans to procure foodgrains from farmers on behalf of Food Corporation of India and State procurement agencies for making instant payment to farmers. “Farmers need to be supported and their payments cannot be delayed or stopped. But more often than not, the government agencies involved procurement will not be paying cooperatives overnight. So the cooperatives use the NCDC credit for paying farmers,” NCDC Managing Director Sundeep Nayak told BusinessLine.

According to him, these short-term loans have very attractive interest rates. Even though financing MSP operations has been going on for several years, NCDC has scaled up the quantum significantly in the recent years. Last year for instance, the corporation spent ₹20,654 crore under the scheme.

“We have already released ₹19,500 crore in three States – Chhattisgarh, Haryana and Telangana, the very day the President gave his assent to the three farm laws,” Nayak said. Till Monday, this has gone up to ₹20,244 crore, said another NCDC official.

‘Bigger role’

After the new farm laws have passed, Nayak said NCDC would have much bigger role to play. “We are aiming to create farmgate storage facilities, which will have electronic Negotiable Warehouse Receipts for farmers. Already, almost 73 per cent of the storage facilities created in the cooperative sector is through NCDC,” he said.

Cooperatives currently account for 12 per cent of the total storage facilities created in the country. “We are already deeply embedded with the farmers in storage space. But that is t the primary cooperative society level. With the new legislation, we have an opportunity to take this to farmgate level. We can have those pre-fab kind of structures, which the farmer will operate and will have legally recognised market-linked mechanism,” said the top NCDC functionary.

NCDC also envisages a bigger role for it in logistics sector as well. The Ashok Dalwai-led Doubling Farmer Income Committee suggested NCDC should set up a pan-India logistics company. This recommendation has been accepted by the government, Nayak said.

The 10,000 Farmer Producer Organisations (FPO), for which NCDC has been chosen as one of the three nodal agencies, would offer a big opportunity for primate cooperative credit societies in the country. “It gives them an opportunity to re-invest themselves. The two new laws enacted by the government has legally defined any kind of farmer groups in the country as FPOs. In that sense even cooperatives can form new FPOs,” the NCDC MD said.

Currently there are 95,000 primary cooperative credit societies in the country, of which two-thirds are doing well.

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Published on October 20, 2020
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