Madhya Pradesh: Compensation scheme for farmers falls prey to trader cartels
New Delhi: An ambitious scheme launched by the Madhya Pradesh government to ensure that farmers receive minimum support prices (MSP) for pulses and oilseeds is falling prey to trader cartels, suggest price data from wholesale markets and testimonies by farmer organizations.
Following a sharp fall in crop prices over the past year which fuelled farmer protests in Madhya Pradesh since June, the state government launched a price deficiency scheme earlier this month which directly compensates farmers when they sell their produce below MSP set by the government.
Named Mukhya Mantri Bhavantar Bhugtan Yojana, the deficit price payment scheme saw an impressive enrolment of over 1.9 million of the 6.5 million growers of oilseeds and pulses in the state.
However, after wholesale prices of crops fell sharply over October, the government could end up spending more than the Rs4,000 crore estimated earlier.
Data on wholesale prices shows that last week, black gram or urad was sold in wholesale markets in Madhya Pradesh at prices between Rs2,300 to Rs2,800 per quintal, substantially lower than the MSP of Rs5,400 per quintal. The same pulse variety sold in Uttar Pradesh and Rajasthan between Rs3,500 to over Rs4,000 per quintal, lending credence to allegations by farmers that traders in Madhya Pradesh are colluding to lower prices.
For soybean, a major oilseed grown in the state, despite an estimated 12% drop in production in 2017-18 year-on-year for the entire country, wholesale prices are around Rs2,500 per quintal, lower than the Rs2,800 per quintal in end October last year and the MSP of Rs3,050 per quintal.
“Since the government has set a deadline of 31 December, farmers are not holding on to their produce even though traders have lowered their prices,” said Kedar Sirohi, a farm leader from the Aam Kisan Union.
“Farmers are hoping that the government will pay them the difference between the sale price and MSP, but since settlements will be based on the difference between the modal price and MSP, we have no clue how much farmers will actually receive,” Sirohi added. Modal price will be calculated as the average price of crops in wholesale markets of MP and other major growing states.
Under the scheme, farmers will be paid the difference between the modal sale price and government-announced MSP. “There is little doubt that traders have colluded to bring down wholesale prices and farmers could be at a loss since modal prices will be calculated based on prices in major producing states,” said an official of a confederation of farmer producer companies in the state who did not want to be named.
“It is early to say whether the scheme will benefit farmers but it is using taxpayers’ money to bail out farmers while agriculture markets continue to be inefficient and prices are determined non-transparently,” said Pravesh Sharma, former agriculture secretary of Madhya Pradesh and a visiting fellow at the Delhi-based Indian Council for Research on International Economic Relations.
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