The working group on risk management in
Table-20: Procurement & Production of Selected Commodities (2004-05)
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| Table-20: Procurement & Production of Selected Commodities (2004-05) Commodity Production (lakh tonnes) MSR (lakh tonnes) Marketed Surplus (lakh tonnes) Procurement to Marketed Surplus Procure- ment Major Procuring States Wheat* 686.37 67.70 464.67 147.85 Punjab, Haryana, UP, MP Rice 831.32 75.00 623.49 265.50 Punjab, AP, UP, Haryana, WB Bajra 7.93 66.70 5.29 0.05 0.95% Rajasthan, Haryana Maize 14.18 77.50 10.99 1.01 9.19% AP, Karnataka, MP Mustard* 75.93 86.00 65.30 20.93 32.05 % Rajasthan, Haryana, UP, MP, Gujarat Cotton$ 164.29 97.60 160.35 27.89 17.39 % Haryana, Punjab, Maharashtra, Gujarat, AP, MP, Karnataka Symbols *:- Procurement during 2005-06 & Production for 2004-05 $:- Procurement & Production in lakh bales of 170 kgs. each. MSR:- Marketable Surplus Ratio It is recognized that MSP interventions at a reasonable level for specific commodities, pushes up prices in the market, benefiting a larger segment of farmers. Obviously, the intention is not to buy the entire marketed surplus on the Government account, since the private players also do their bit. A trickle down effect on prices is, therefore observed due to such intervention, since demand gets induced during the peak marketing season. This acts horizontally, across the farmers and ensures a reasonable price safeguard. Thus, farmers may not have to subscribe for risk and protection in the market in an MSP regime if implemented efficiently across States and time. However, such an effect is not observed in the case of crops, with a high marketed surplus, such as mustard and cotton. In view of that the MSP is the major cause for rising food subsidies, which is not true. The entire subsidy does not result into direct benefits to farmers. In fact, in addition to ensuring a reasonable price to the farmers, the subsidy’s main objective is to keep the prices depressed in the interest of consumers by maintaining a comprehensive public distribution system and by keeping a buffer stock, from the food security point of view. Also, procurement incidentals are high due to various taxes and levies, which in certain States areas high as 11.5%, of the value of output procured. The policy of Minimum Support Price has paid rich dividends over the years, in those areas/ States where the mechanism turned out to be effective and reliable. It not only provided relative stability in the prices received by farmers, but also caused a steady growth of their incomes in specific areas. The policy also encouraged adoption of changed cropping pattern and led to adoption of modern farm practices by the farmers. MSP combined with the price support scheme (PSS), has been a major factor in encouraging farmers to grow more oilseeds. Had there been no PSS, market prices of oilseeds, in particular of mustard, would have fallen much below MSP in the face of bumper production and unabated imports. In case of cotton, the year 2004-05 witnessed a bumper crop and depressed price scenario in the global market. PSS intervention by CCI was substantial (27.5 lakh bales, which benefited the farmers to a great extent, in a depressed market. The Working Group felt that MSP needs to stay, as an effective safeguard to protect the interest of the farmers. However, it needs to be made more effective by implementing the following: v Larger number of agricultural products be covered under MSP v MSP is clearly a risk coverage measure and the Central Government bears the losses. High taxes, mandi fee, cess on various agricultural products have resulted into low price realization by the farmer. Therefore, such charges need to be rationalized and kept within a cap of v Decentralized MSP operations (procurement) need to be encouraged. v MSP needs to be universalized, by taking this as a benchmark price for implementing NAIS. v NAFED/Central Agency maybe given adequate and timely financial support for conducting MSP/PSS operations more effectively. v A revolving fund needs to be setup for effective implementation of MSP regime. Download 0.68 Mb. Share with your friends:
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