MP’s Bhawantar scheme for crops fails to bridge MSP-wholesale rates gap

Is the Madhya Pradesh government’s much-discussed (Price Deficiency Payment Scheme) showing signs of stabilising?

Unlike in 2017, the open market wholesale rates for and maize, two crops incorporated into the scheme, haven’t seen a big decline from their current level, which is below the centrally-set minimum support price (MSP), so far this year. The was begun last year when there were allegations of traders cornering it for their own benefit.

In the state’s major wholesale markets (mandis) where has been implemented since October 20, the rate for has been Rs 2,900-3,100 a quintal. This is almost 10 per cent less than the of Rs 3,399 a quintal for the 2018-19 season but there are no signs of a meltdown from these low levels.

What one should note, though, is that unlike in 2017, the of 2018 isn’t a price deficit financing scheme in the strictest sense.

Last year, the state reimbursed the difference between the modal rates and to farmers, up to a limit. Modal rates are the average price at nearby mandis.

This year, however, even before the BBY window was opened, the state had fixed its payout at up to Rs 500 a quintal to growers of and maize, irrespective of the actual difference between modal rate and 

This is also in line with the Centre’s latest guidelines (under PM-ASHAA, approved last month). These say payout under any (PDPS) shouldn’t exceed 25 per cent of the MSP value of the crop for which it has been started. So, in the case of soybean, the payout to farmers under Bhawantar should not exceed Rs 850 a quintal. The MP government, as noted, has decided to not pay more than 500 a quintal for soybean under Bhawantar.

“This obviously isn’t Bhawantar or a PDPS in the strict sense, as there is no actual shortfall calculation and a fixed payment is being made. In any case, Bhawantar is a difficult scheme to implement in its truest form, as there is a problem in maintaining record and registers,” says Siraj Hussain, former secretary of the Government of India.

Among the crops that are to be directly procured from farmers under MSP are the crops of urad (black gram) and moong (green gram). Though procurement was to start from October 20 and continue till January 19, farmers say much hasn’t been purchased in these crops. “Not a single grain, while prices are crashing,” alleged Kedar Sirohi, working president of the MP Khet Mazdoor Congress, while speaking to Business Standard.

The MP state government, with the Centre’s National Agricultural Cooperative Marketing Federation of India (Nafed), has plans to procure 345,000 tonnes of urad this year from farmers, along with 31,000 tonnes of moong. Further, the government says it also plans to benefit around 60 per cent of the state’s 4.5 million oilseed and pulses farmers in 2018 through a combination of BBY and direct procurement through Nafed.

In urad, wholesale rates have been Rs 3,800-4,100 a quintal in major state markets, 40 per cent less than the MSP of Rs 5,600 a quintal. Moong is selling at 60-70 per cent less than the MSP. There has been no large-scale procurement.

In maize, the open market price in MP is 18-30 per cent below the MSP, while the Bhawantar payout is capped at Rs 425 a quintal.