Area
India
Commodity Group
Oilseeds, oils and meals
Commodity
Grains, oilseeds
Date
01/05/2018
Policy Category
Stocks
Policy Instrument
Public procurement / production support
Description
Considered reforming the country\'s public procurement scheme for agricultural crops, including oilseeds, to enforce minimum support prices set by the Government.
Notes
According to local press reports, the Government of India is considering to reform the countrys public procurement scheme for agricultural crops. New procurement mechanisms under consideration would focus on all 23 crops for which minimum support prices (MSP) are set by the Government, including oilseeds unlike the current practice where public procurement concentrates heavily on wheat and rice. Under Indias Price Support Scheme (PSS) also oilcrops, pulses and cotton are supposed to benefit from public procurement, but in practice public purchases of these commodities has been intermittent and hence insufficient to prevent farmers from making distress sales at harvest time (see also MPPU July/Dec.17 & Mar.18). Recognizing that the enforcement of MSPs requires coordinated efforts and cost sharing arrangements between individual states and the Centre, the Central Government pledged to reform the countrys PSS. Reportedly, in the future, local governments will be able to choose between three mechanisms: i) a Market Assurance Scheme involving decentralized, discretional procurement/disposal operations handled by state agencies, comprising direct payments to farmers; ii) a Price Deficiency Payment Scheme (PDPS), under which farmers are provided with the difference between market prices and MSPs, whenever market rates fall below the benchmarks; and iii) using private agencies to carry out routine acquisitions at MSP levels. Policy makers are still discussing how to share the financial burden of the proposed schemes between the Centre and individual states and how to address remaining institutional and technical challenges inherent to each system. Currently, a PDPS covering selected oilcrops is under implementation on a trial basis in Madhya Pradesh, while other states, most recently Odisha, engaged in temporary procurement operations (see MPPU Feb./Sep./Oct.17).
