Oilseeds market prices show little change as MP caps payout under Bhawantar

A big reason for this that Bhawantar of 2018 isn't a price deficit financing scheme anymore, govt has fixed the payout at up to Rs 500 per quintal to farmers for soybean and maize

Open market rates of soybean and maize, the two crops that have been incorporated into the much talked about Bhawantar Bhugtan Yojana (Price Deficiency Payment Scheme) of Madhya Pradesh this year, haven’t so far seen a big decline from their current below-MSP levels, unlike 2017.

So, is the Bhawantar Bhugtan Yojana (BBY), which started as a pilot last year, showing signs of stabilising, sidestepping allegations of traders cornering the scheme for their own benefit?

On first look, it might seem so because in major wholesale markets of Madhya Pradesh, where BBY is in place since October 20, the wholesale open market rate of soybean has hovered around Rs 2,900-3,100 per quintal.

Though this price is almost 10 per cent less than the Centre-fixed MSP of Rs 3,399 per quintal for 2018-19 Kharif season, so far there hasn’t been any signs of a meltdown from the already low levels under the impact of Bhawantar.

A big reason for this is that unlike 2017, BBY of 2018 isn’t a price deficit financing scheme in the strictest sense of the term.

In 2017, the state government reimbursed the difference between the modal rates and MSP to the farmers, up to a certain limit.

This year, however, even before the BBY window was opened, the government had fixed the payout at up to Rs 500 per quintal to farmers for soybean and maize, irrespective of the actual difference between the modal rate and MSP.

This is also in line with the Centre’s latest guidelines under the Pradhan Mantri Annadata Aay Sanrakshan Abhiyan (PM-ASHAA), which says that the payout under any Price Deficiency Payment Scheme (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 could not exceed Rs 850 a quintal.

The MP state government has decided to pay at a flat rate which will not be more than Rs 500 a quintal for soybean under Bhawantar.

“This obviously isn’t Bhawantar or Price Deficiency Payment scheme in the strict sense as there is no actual shortfall calculation and fixed payment is 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,” Shiraz Hussain, a former agriculture secretary in Government of India said.

Nothing has been done yet, according to farmers, for the crops that are to be directly procured from farmers under MSP through the Price Support Scheme (PSS) that includes Kharif urad and moong even though officially the procurement had to start from October 20 and continue till January 19.

“Though the procurement of urad and moong had to start from October 20, so far not a single grain has been purchased anywhere while prices are crashing almost on a daily basis,” Kedar Sirohi, working president of MP Khet Mazdoor Congress told Business Standard.

In MP, the state government along with National Agricultural Cooperative Marketing Federation of India (Nafed) has plans to procure 345,000 tonnes of urad from farmers this year, along with 31,000 tonnes of moong.

It plans to benefit around 60 per cent of 4.5 million farmers producing oilseeds and pulses in Madhya Pradesh in Kharif 2018 through a combination of BBY and direct procurement through Nafed.

In Urad, wholesale market rates have hovered around 3,800-4,100 per quintal in major wholesale markets of the state, around 40 per cent less than MSP of Rs 5,600 a quintal, while moong is selling at around 60-70 per cent less than the MSP.

But still, there hasn’t been any sign of any largescale procurement.

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