The working group on risk management in
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| 6.5. Price Stabilization Fund The Price Stabilization Fund was established by the Ministry of Commerce, based on a report of the NCAER, for four plantation crops - Tea, Coffee, Rubber and Tobacco. A price spectrum band is announced every year, by taking into account a seven year moving average of international prices, for the four plantation crops. If the domestic price is between -20 percent and + 20 percent of the moving average price, then the year is categorized as normal year , if it is below 20 percent the year is a distress year, and if it is above 20 percent, the year is a boom year. In boom year, farmers will have to contribute Rs (upto 4 hectares) to the price stabilization fund account , while in distress years, the Government of India will contribute Rs, and in normal year the contribution will be Rs each from the Government of India, as well as by the farmers. The scheme was introduced into address the price fluctuations in the post WTO period The present scheme is not attractive, due to inherent problems in scheme design. The amount of assistance provided is very small, and the scheme needs to be restructured, in combination with an insurance scheme. The modifications suggested for the scheme are the following: v Area based slabs needed instead of a uniform slab of Rs for all growers up to 4 hectares v Crop specific support, to be linked to the cost of production & acreage v A minimum support of Rs.5000/ha. maybe assured, for plantation crops v Grower contribution to be reduced in boom years, while government share increased in distress years. v More crops to be added like coconut, pepper, cashew nut, etc v Better incentivisation offered, to motivate farmers to deposit in the account v Variable deposits maybe permitted for growers v Detailed reexamination of the scheme is required including for linking it to crop insurance. Download 0.68 Mb. Share with your friends:
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