CACP asks Centre to introduce price deficiency payment scheme

Our Bureau Bengaluru | Updated on July 06, 2018 Published on July 06, 2018

2017 pilot scheme in MP cut State’s cost to 18% of spend on MSP procurement in 2016

In a bid to ensure farmers benefit from minimum support prices (MSP), the Commission for Agricultural Costs and Prices (CACP) has suggested that the Centre explore the possibility of implementing the price deficiency payment (PDP) scheme across the country.

Madhya Pradesh had implemented such a scheme — the Bhavantar Bhugtan Yojana (BBY) — on a pilot basis during last year’s kharif season to safeguard farmers from price fluctuations.

Earlier this week, the Centre announced a 4-52 per cent increase in MSP for kharif crops over last year.

In its non-price recommendations for Kharif 2018, the CACP said a system should be brought in place to ensure MSP for farmers, wherein the difference between the MSP and average market price in the APMC (Agricultural Produce Market Committee) yards is directly paid to farmers’ bank accounts.

Minimising intervention

Such a move will minimise government intervention in procurement. Besides, it will help curb foodgrain losses due to lack of adequate storage, as farmers will be selling their produce directly to traders under the scheme.

The CACP observed that the BBY scheme had helped the MP government reduce its costs to about 17.85 per cent of what was incurred on procurement at MSP in the previous year. Therefore, the Centre should look at implementing the scheme pan India, the CACP said, adding that more crops should be included under such schemes.

Further, to instil confidence among farmers on procurement of their produce, a ‘right to sell at MSP’ legislation may be introduced, the CACP suggested.


“The BBY scheme in MP could benefit only 23 per cent of production, casting a shadow on how it will benefit the majority of farmers if it is scaled up to an all-India level,” observed agriculture economist Ashok Gulati and his colleagues in a working paper at the Indian Council for Research on International Economic Relations (ICRIER).

They also said that the BBY was prone to manipulation by traders and lower-level market functionaries and may end up helping them rather than the farmers.

PTI adds: Meanwhile, Gajendra Singh Shekhawat, Minister of State for Agriculture, said in Delhi that the Centre would announce a new mechanism to ensure that farmers get the benefit of MSP if market prices fall below the benchmark rate.

Senior officials of NITI Aayog had recently made a presentation before the Prime Minister on the proposed procurement mechanism and its financial implication.

The Aayog has proposed that States should be allowed to choose from three models — Market Assurance Scheme, Price Deficiency Procurement Scheme and Private Procurement and Stockists Scheme.

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Published on July 06, 2018
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