Govt may declare Rs100 bn scheme for MSP to oilseed farmers as imports rise

With growing import dependence on cooking oils, the government is likely to announce a over Rs 100 billion scheme under which oilseeds farmers will be compensated if the rates fall below the minimum support price.

The agriculture ministry has prepared a cabinet note proposing a new mechanism 'Price Deficiency Payment' on the lines of Madhya Pradesh government's Bhavantar Bhugtan Yojana (BBY) to protect oilseeds farmers, the sources said.

Under the proposed scheme, the government will pay to farmers the difference between the MSP and monthly average price of oilseeds quoted in major wholesale markets.
 

India imports around 14-15 million tonnes of edible oils annually, which is around 70 per cent of the domestic demand.

In the budget this year, the government had announced that it will put in place a fool-proof mechanism to ensure MSP to farmers. It had asked think-tank to suggest mechanism in consultation with the union agriculture ministry and states.

"Based on the recommendations, the ministry has moved a cabinet note proposing implementation of the Price Deficiency Payment (PDP) scheme only for oilseeds," the sources said.

However, the states will have an option to choose either a PDP or the existing Price Support Scheme (PSS). The new scheme will be implemented for up to 25 per cent of the oilseeds production of the state, they said.

Under the PSS, the central agencies procure commodities covered under the MSP policy when prices fall below the MSP.
 

The Food Corporation of India (FCI), the government's nodal agency for procurement and distribution of foodgrains, already procures wheat and rice at MSP for supply through ration shops and welfare schemes.

The Centre also implements Market Intervention Scheme (MIS) for procurement of those commodities, which are perishable in nature and are not covered under the MSP policy.
 

Under the MSP policy, the government fixes the rates for 23 notified crops grown in kharif and rabi seasons.

Madhya Pradesh, Rajasthan and Gujarat are major oilseeds growing states in the country.

Total Oilseeds production during 2017-18 is estimated at 31.31 million tonnes as against 31.28 million tonnes during 2016-17, as per the official data.