Govt moots Bhavantar-like scheme to help farmers in case of falling prices

By: | Published: March 16, 2019 5:03 AM

The Bhavantar Bhugtan Yojana (BBY) — a novel scheme launched by the Madhya Pradesh government for kharif crops last year, compensates farmers registered under it if their selling price is lower than the official MSP.

bhavantar bhugtan yojana, agriculture sector, agriculture industryDesigned to protect farmers against falling prices of crops in the aftermath of the farmers’ agitation that rocked Madhya Pradesh in 2016, the BBY is India’s first large-scale experiment with deficiency price payment in agriculture.

Farmers across the country may soon have some relief at times when crop prices fall below the MSP by way of getting the benefit of price deficiency on the lines of the Bhavantar Bhugtan scheme that was introduced by Madhya Pradesh. The Commission for Agricultural Costs and Prices (CACP) has suggested a price deficiency scheme for farmers, giving them the option of storing their produce during times of distress and also getting the benefit in case prices continue to remain below minimum support prices (MSP).

Vijay Paul Sharma, chairman of the CACP, said they have made a recommendation to the government to this effect for crops where there are no assured outlets.

The Bhavantar Bhugtan Yojana (BBY) — a novel scheme launched by the Madhya Pradesh government for kharif crops last year, compensates farmers registered under it if their selling price is lower than the official MSP.

Designed to protect farmers against falling prices of crops in the aftermath of the farmers’ agitation that rocked Madhya Pradesh in 2016, the BBY is India’s first large-scale experiment with deficiency price payment in agriculture. Though it has had its problems, many farmers continue to repose faith in the scheme.

“The problem with Bhavantar scheme was that so called perceived difference between MSP and the market prices. One of the options could be that the modal price has to be based on some evidence. Look at last 5 years’ price trend – difference between MSP and market price in certain crops is 10%, 15% or even 20%.

“What we are suggesting is that we tell farmers that if you don’t want to sell it during those 3 months, you can store it, take a pledge finance loan with the condition that if market prices are below the MSP, then you get benefit of price deficiency payment for the next 3 months. If market prices move up, gains will be yours, and if it is below MSP, you get benefit of price deficiency scheme. It allows the farmer to take risk,” he said.
Usually, some states pay for storage costs, but I would suggest to subsidise cost to some extent, Sharma said. In 90% to 95% cases, prices move up, but in certain cases, if prices are below the MSP, the farmer is assured of benefit. So he can stagger crop arrivals in the market, Sharma said.

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According to Sharma, in certain crops, such as groundnut or soyabean, there is no assured outlets. Even if the government procures it, it cannot convert this into oil. Ultimately, the government is going to offload it into the market at a price which is much below than the economic cost, because it procures at MSP and then offload at a lower price. So, traders are sitting silent during procurement season because they know that the government is going to procure it, Sharma said.

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