Centre moots new price support scheme to fix rural distress

In a bid to prevent distress sales at prices below the minimum support price(MSP), the Central government along with states proposes to launch a new price support scheme for farmers, said a Livemint report.
 
Under the proposed “market assurance scheme”, states will be free to procure all crops from farmers for which MSPs are announced, except rice and wheat, which are already being procured by the Centre for the public distribution system, said the Mint report.
 
For any losses capped at 30 per cent the Centre will compensate the states, which will have to dispose the procured crops.
 
This scheme will ensure an assured price for the farmers, mitigating the price risks faced by farmers after harvest, Livemint reported.
 
The report further said that the states will take ownership of the scheme, including which crop to procure and in what quantities, when wholesale prices drop below MSPs.
 
The state governments will be free to use the procured crops for targeted nutrition-support programmes such as mid-day meals for schoolchildren, or sell them in the open market, the report added.

“While any intervention and attention to agriculture marketing is welcome, we must await full details of the scheme to make any specific comments,” Pravesh Sharma, farm expert and a visiting fellow at the Indian Council for Research on International Economic Relations told Livemint. 

“However, it can be generally observed that government does not seem to risk spending political capital to directly take on poorly functioning agriculture markets, where lack of competition, cartelization and opaque price discovery are the root causes of price distortions,” Sharma added.