Falling prices: Niti Aayog recommends govt to offer 15-20% of MSP as commission to private traders

Published: October 16, 2019 5:11:06 AM

Under the current provisions of PPSS, the Centre has left it to the states to decide how to dispose of oilseeds procured by any private trader or processor while agreeing to pay 15% of the MSP as service charge.

mandi prices millets, ragi prices, bajra prices, minimum support prices , MSPs, Niti Aayog MSP, commission private traders mandi, india coarse cereals, distress sales by farmers, agri crisis, agriculture in indiaIf the proposal is implemented, the private trade will for the first time play a significant role in public procurement of grains.

By Prasanta Sahu & Prabhudatta Mishra

With mandi prices of millets such as ragi and bajra ruling at 15-24% below their minimum support prices (MSPs), the Niti Aayog has recommended that the Centre offer 15-20% of MSP as commission to private traders to encourage them to buy coarse cereals at MSP and avoid distress sales by farmers.

If the proposal is implemented, the private trade will for the first time play a significant role in public procurement of grains. Coarse cereals have practically never been procured in a large scale in the country as the state-run agencies, including FCI, anyway had their hands full and finances stretched with the mandate to procure rice and wheat, more in demand among the National Food Security Act beneficiaries.

Of course, if millets (coarse cereals, which are officially called nutri-cereals given their high nuritional value) get procured by private players thanks to the incentives being offered, it will add to the government’s procurement budget; however, using private agencies is still a cheaper option than asking FCI to go the whole hog in the purchase of millets too at MSP rates, since the latter option involves the cost of storing also.

Annual procurement of millets have been less than 3% of the production in recent years.

India’s nutri cereals production in kharif 2019-20 (arrivals of which began a fortnight ago) is estimated at 12.11 million tonne, up from 11.95 million tonne in the previous year. If MSP values are ascribed to the output, millets in kharif 2019-20 are worth `27,500 crore.

When its flagship PM-Aasha scheme was launched last year, it was expected to ensure MSPs to farmers for all the 14 crops for which the government announces the benchmark prices. The more the government procures, the more will be the losses since close to 25% are added to the MSP as expenses on mandi fees, transport, handling and warehouses.

The PM-Aasha scheme has three components — price support scheme (PSS), price deficiency payment scheme (PDPS) and private procurement and stockist scheme (PPSS). While Nafed is the main agency that handles PSS under which oilseeds and pulses are being procured, up to 25% of output. Only oilseeds are allowed under both PDPS and PPSS components.

Under the current provisions of PPSS, the Centre has left it to the states to decide how to dispose of oilseeds procured by any private trader or processor while agreeing to pay 15% of the MSP as service charge. However, the PPSS scheme is yet to take off, as no state has shown keen interest in it.

“If private traders are to be compensated for the losses on purchase of millets at MSPs, they may agree to take part in the procurement system,” a government official said.

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