The Centre has sent the guidelines for Price Deficiency Payment Scheme in oilseeds under PM-AASHA scheme to the States. The Centre’s note, seen by BusinessLine, says that the scheme will cover all oilseeds where MSP has been announced by the Centre. This includes – groundnut, soyabean, sunflower, sesamum, niger seed, rapeseed (mustard seed), safflower and toria.

The Price Deficiency Payment Scheme (PDPS) is where the Centre ensures remunerative price to farmers without physical procurement. The difference between the MSP and market price (modal price) is paid directly in to the farmers’ bank account.

The note explains that the PDPS has been chosen for oilseeds, as it has been practically impossible to procure oilseeds at MSP by the government all these years as the requirement for warehouse space and working capital is huge.

Oilseeds, particularly groundnut, require large warehouse space and tend to rot due to moisture, before the stock is liquidated. Also, given that the oilseeds stock can’t be distributed through the PDS, as they have to be processed before consumption, procuring them is not actually advantageous.

It has to be noted that the Centre will support the States and take the financial burden of the scheme for up to 25 per cent of production and only up to 25 per cent of MSP. The cost of any benefit beyond this limit has to be borne by the States offering it.

Also, only crops of the FAQ (fair average quality) variety will be eligible for the benefits.

Compensation payment

The payment of compensation to the farmer will be done within one month from the date of sale of the commodity. The scheme’s benefit will be given to farmers who register for the scheme. Further, the sale should be within the fixed 90-day period and in a notified mandi.

States which implement the scheme have to develop a portal specifically for PDPS, register farmers with details including Aadhaar number, bank account number, mobile number and crops sown. This data should be verified by the Revenue Authorities of the States before the notified sale period finishes.

Modal price

Under PDPS, farmers will be compensated based on the modal price, says the notification.

The modal price is the weighted average price of the crop in the particular mandi and the same crop’s price in agmarknet portal of two or more mandis notified by the State. The modal price shall be published on the website of the State every month.

The price compensation under PDPS to a farmer will work this way:

* If the sale price of the crop is equal to the MSP, then no compensation.

* If the sale price is less than MSP but higher than the modal price, then the difference between the MSP and actual selling price will be paid to the farmer.

* If the sale is below the modal price, the compensation will be admissible to the extent of difference between the MSP and modal price.

However, if the modal price is above the MSP for the crop, then no compensation will be paid even if the farmer sells his produce at a lower price.