Need to leverage the potential of private players in food trade
Bringing in the private sector will increase MSP support coverage, especially in central and eastern states
Among the recent slew of announcements aimed at quelling the criticism that the National Democratic Alliance government has missed the opportunity to attend to agriculture adequately, the revamped scheme to provide minimum support prices (MSPs) to farmers under the PM-AASHA (Pradhan Mantri Annadata Aay Sanrakshan Abhiyan) scheme is perhaps the most ambitious. The scheme promises at least 50% returns to farmers over their cost of production. With kharif crop arrivals peaking in most states, news reports suggest that the procurement ecosystem in a majority of states is struggling to cope with this challenging mandate.
While the historically well-oiled procurement systems of Punjab, Haryana, Madhya Pradesh and parts of western Uttar Pradesh are functioning fairly efficiently, MSP purchasing by official agencies in the rest of the country is patchy at best and non-existent at worst. Certainly so, if you travel east of Lucknow, starting from the eastern part of Uttar Pradesh, to Bihar, Jharkhand, Odisha and the North-East, where AASHA is not even a term that has percolated to the ground level. Some central and western states are purchasing select commodities with mixed results. But overall, it’s fairly evident that mandi prices are ruling below the declared MSP level for most kharif crops. Traders who were earlier apprehensive about the impact of AASHA are now quite comfortable with the present price trends and normal purchasing is robust in major markets across states.
Realistically speaking, it cannot be expected that states with little or no history of large scale MSP procurement can mobilize the necessary human, logistical and financial resources to provide MSP support to farmers in the short run. But what was expected was at least a few pilots in each state, to show the states’ resolve to translate AASHA into action. It seems we must wait till the rabi marketing season opens in April to judge the seriousness of the states about this issue. But with the parliamentary election season likely to be in full flow at that time, our hopes may be belied yet again.
Is it possible to rescue AASHA from joining the serried ranks of well-intentioned central schemes languishing in the states? The answer, in my view, lies in leveraging the potential of private players in food trade. While AASHA does envisage a role for the private sector in MSP procurement, no details have emerged so far to take the concept forward. The delay defies explanation. For the government, it should not matter whether the agency undertaking procurement is a public or private entity, provided the farmer is paid the stipulated price (this can be electronically tracked today) and the stock held at an approved warehouse (this too is independently verifiable). Bringing in the private sector will dramatically increase MSP support coverage, especially in central and eastern states. It remains to be seen if the Centre recognizes the urgency and issues detailed guidelines well ahead of the rabi harvest.
Pravesh Sharma is a former IAS officer.
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