Minimum Sale Price - PPPP

Farmers get third of veggies' retail price'

Middlemen & Retailers Gain from Price Spikes: ?Studies Published By RBI

If there is an MRP applicable for the agri based processed food / utilities, why not there be an MSP for primary agri produce?

Indian farmers are getting only about one third of the final selling price of fruits and vegetables, while a majority share is skimmed away by wholesalers and retailers, a series of research papers published by RBI on food inflation has showed. This is in contrast to other sectors, such as dairy, where farmers receive around 70% of the final price.

Egg producers seem to be best placed, getting 75% of the final price, while for poultry meat, farmers and aggregators together account for 56% of the price.

While consumers fret about tomato, onion and potato (TOP) prices at least twice a year as prices soar on seasonal factors such as excess or deficient rains or high or low temperatures, it is not as farmers benefitting. The papers estimated that farmers receive approximately 33% of consumer price for tomatoes, 36% for onions and 37% for potatoes.

The report also provides figures for fruits, estimating that farmers receive 31% of final price for bananas, 35% for grapes, and 43% for mangoes in domestic market.

The study, co-authored by agriculture economist Mr. Ashok gulati, also concludes that forecasting price spikes is possible through a “balance sheet approach”. The papers also suggest various means in which the policy makers can eradicate these price spikes.

To prevent price spikes in TOP, the study recommended in leveraging e-NAM, promoting farmer collectives and relaunching futures trading, building more cold storage facilities and increasing processing facilities etc.

Any thoughts on why the Insolvency & Bankruptcy Code, which is applicable to Industrialists and Corporates to legitimately cleanse their NPAs & Debts from their Creditors / Bankers, be similarly not applied to Farmers & their Loans in India! - Just because it is an unorganised sector or it doesnot have any guaranteed returns like any other industry?

Hence, there is an urgent requirement for providing MSP to farmers as there is an MRP pricing for all secondary products; through which, the price spikes can be controlled through implementation of proper check mechanisms which shall be beneficial to end consumer and the ultimate beneficiary shall be none other than the producer i.e., farmer.

Two – Implementation of MSP under PPPP model. It has always been a myth that MSP shall mandatorily be provided by governments, where in the governments procure the farm products at MSP. This results in huge burden of exchequer due to poor logistics, supply chain management capabilities of government / its departments resulting in more than 40% wastage of such procured products due to shorter shelf-life issue.

MSP to farmers:

Agriculture like any other enterprise can sustain, only when it can generate net positive returns to the farmer-producer. A market is a place, where a produce is transacted and price per unit is determined, resulting in the total value that a farmer-producer fetches. Since value returns impinge upon a farmer’s income, agricultural markets and marketing efficiency become critical.? In order to protect the interest of wider / large community in India i.e., agrarian / farmer community and to enhance farmers’ income, it entails an urgent need to revisit the existing market structure and bring in a more competitive marketing environment. This combined with improved levels of productivity and reduced cost of cultivation/production can drive agricultural growth, farmers’ welfare, productive employment and economic prosperity in rural areas of the State. Organized wholesale marketing in the State is promoted through a network of regulated markets set up under the provisions of States’ Agricultural Produce Marketing (Regulation) Acts. These market structures are aimed at regulation and attainment of transparency in transactions, with a view to transferring remunerative prices to the farmer producer. Over time, however, these markets have been found inadequate due to the ever-changing profile of India’s farm produce. The recent developments show higher levels of outputs in the domain of agriculture, horticulture, dairying, poultry and fisheries, besides of course increasing quantum of cereals, pulses and oilseeds. Since the onset of economic liberalization of the country in 1991, the nation has also been experiencing visible changes in its transport and communication infrastructure besides penetration of internet and smart phones in the rural areas and greater technology-friendliness amongst the youths, who dominate the demography. With increasing purchasing power, mobility and changes in tastes and preferences, the consumers possessed by greater information and awareness are beginning to demand quality and differentiated products at rational price. The restrictive market structures as exists in the State today is not adequately enabling the producers to harvest the economic advantages of place, time and form value of their agricultural commodity.

What is needed is a barrier-free unified agricultural market in the State. The structure of State agriculture is changing, and the sector is diversifying around cereals, pulses, oilseeds, commercial crops like cotton, horticultural crops, livestock, fisheries, poultry etc. This needs appropriate legislation to enforce minimum support prices as is declared by Central/State Government for Farm produce with following necessary legislative interventions:

i) Creation of a conducive environment for setting up and operating private wholesale market yards and strengthening Rythu Bharosa Kendrams (RBKs) so as to enhance competition among different markets and market players for the farmer’s produce, to the advantage of the latter.?

(ii) Promotion of direct interface between farmers and processors/ exporters/ bulk buyers/ end users through RBKs so as to reduce the price spread bringing advantage to both the producers & the consumers.?

(iii) Enabling declaration of warehouses/ silos/ cold storages and other structures/ space as market sub –yard to provide better market access/ linkages to the farmers.

(iv) Giving freedom to the agriculturalists to sell their produce to the buyers and at the place & time of their choice, to whom so ever and wherever they get better prices.

???????? Therefore, an Act to safeguard the interests of the farmers by ensuring them the minimum support price (MSP) for the farmer’s produce obtained from Agriculture, Horticulture, Aquaculture, Animal Husbandry and Sericulture in order to avoid the exploitation of the farmers and provide a comprehensive legislation for enforcement of MSP towards safeguarding the farmers interest, in the State and for matters connected therein or incidental thereto.

The proposed Act may be called the Farmer’s Produce Support Price Act.

(2) It shall extend to the whole of the States.

(3) It shall apply to all transactions made by buyers of Farmer’s produce as may be notified in the Rules prescribed by the Government under this Act from time to time.

(4)? It shall come into force at once.

How it works:

(1) There shall be notified the minimum support price for farmer’s produce which shall not in any event be lower than any such price, if fixed, under any Central Act or Rules made thereunder.

(2) The minimum support price notified by the Government shall be subject to periodic revision as prescribed under the rules in accordance with the methods and formula as prescribed thereunder with due regard to such factors as may be relevant for the subject matter including cost of production, changes in its input prices, the Input-output parity, trends in market prices, demand and supply, inter-commodity price parity, its effect on industrial cost structure, its effect on cost of living, its effect on general price level, its price in global markets, parity between the prices paid and prices received by the farmers, perishability of the product, inflation, prescribed quality & conditions from time to time its effect on issue prices etc.

(3) Any transaction in violation of the minimum support price notified under the Act in regard to the farmer’s produce shall be an offence as prescribed under this Act.

Applicability:

(1) The provisions of this Act shall have effect notwithstanding anything inconsistent therewith contained in any other law for the time being in force or in any instrument having effect by virtue of any law other than this Act.

(2) The Minimum Support Price notified under this Act in respect of the farmer’s produce shall be enforceable on every transaction in the State in regard to such farmer’s produce whether such transactions occur in markets, cooperative societies and any other collective activities/ transactions in regard to the same. Which means, such produce purchased not only the by the government agencies, even the procurement by private entities, MNCs, suppliers, mediators (middlemen), common people etc., shall be done at MSP only i.e., People Public Private Partnership (PPPP).

?(3) The entitlement of the farmers to transact farmer’s produce in the trade area as provided for in the Act shall be in addition to any other places, markets, fairs, etc. where such transactions are enabled under any law for the time being in force.

(4) The provisions of any Central Law in relation to regulation of transactions of farmer’s produce shall be abided by the Government while notifying the Minimum Support Price and the Rules concerning therewith.

This shall safeguard the interests of the farmers by ensuring them the Minimum Support Price (MSP) for the farmer’s produce obtained from Agriculture, Horticulture, Aquaculture, Animal Husbandry and Sericulture in order to avoid the exploitation of the farmers and provide a comprehensive legislation for enforcement of MSP in the State. Thus it safeguards the interest of farmers and end consumer.

OBJECTIVES:

(a)? To notify the Minimum Support Price for such farmer’s produce obtained from Agriculture, Horticulture, Animal Husbandry & Sericulture so as to safeguard the interest of the farmers.

(b)? ?To ensure the enforcement under the provisions of this Act by providing a comprehensive legislation in the state.

(c)? To empower the officers (Controlling Authority, Authorized Officers, Authorized Inspectors) as notified by the Government under the provisions of this Act.

Therefore, A new Act need to be enacted to bring all the Rules and Regulations for farmer’s produce support price fixation and enforcement (wherein the Government shall fix Minimum Support Price and ensure the enforcement of the provisions under this Act) which shall be applicable on all those who purchase such a produce.