Will private participation in procurement process be a game-changer, or is it too late?

Will private participation in procurement process be a game-changer, or is it too late?


Written by Parthasarathi Biswas
| Pune |
Published: September 23, 2018 9:30:30 am

Will private participation in procurement process be a game-changer, or is it too late? While the scheme appears to be feasible on paper, implementation remains a problem at the ground level. (Express photo by Jasbir Malhi/File)

Last week, the Union Cabinet unveiled a series of measures to ensure farmers are paid the Minimum Support Price (MSP) for their produce. Termed Pradhan Mantri Annadata Aay Sanrakshan Abhiyan (PM-AASHA), the scheme has three components: the Price Support Scheme (PSS), the Price Deficiency Payment Scheme (PDPS) and the pilot of Private Procurement and Stockists Scheme (PPSS).

The Cabinet cited the measure as one of the government’s initiatives towards doubling farmers’ incomes. However, it remains to be seen how these schemes end up being implemented on the ground.

PSS and PDPS: tried and tested earlier

Barring PPSS, the other two components are not new tools for market interventions. PSS is an old scheme which sees government agencies, such as the Food Corporation of India (FCI) and the National Agricultural Cooperative Marketing Federation (NAFED), procuring commodities at the government-notified MSP. While the FCI’s mandate is mainly procurement of food grains, NAFED deals with pulses, oilseed and copra, among others.

NAFED starts its operations when the market price of commodities falls below their MSP. Working through its agencies like the Maharashtra State Cooperative Marketing Federation and the Vidarbha Cooperative Marketing Federation, it sets up procurement centres. Farmers who register themselves online and submit documents, including the 7/12 land records, can sell their produce at these centres in exchange of MSP.

While the scheme appears to be feasible on paper, implementation remains a problem at the ground level. Farmers in Maharashtra have complained about delayed payment and lack of transparency in the procurement processes of tur and chana. The procurement centres have also faced charges of corruption and multiple police cases have been filed.
Last year, the Madhya Pradesh government had undertaken the PDPS scheme, under which the state government was supposed to pay farmers the difference between the existing market rates and MSP. This system helped the government save a considerable amount by avoiding storage and procurement costs. However, the Bhavantar Bhuktan Yojna, as it was called in MP, had also faced charges of corruption and it was alleged that traders had joined hands to distort market prices.

While it was widely expected that PDPS would be implemented as a national scheme in the 2018-19 budget, the central government had not done so. In fact, the MP government subsequently withdrew the scheme and the cabinet now allows PDPS for only oilseeds.

What’s new: PPSS

The government is planning to roll out PPSS in select districts and wholesale markets. This pilot scheme will be used only for oilseeds.

A press release by the cabinet stated, “The selected private agency shall procure the commodity at MSP in the notified markets during the notified period from the registered farmers, in consonance with the PPSS guidelines, whenever the prices in the market fall below the notified MSP and whenever authorised by the state/UT government to enter the market, and maximum service charges up to 15 per cent of the notified MSP will be payable”.
This will mark the first time private players are going to be involved in the government procurement process.

However, experts have expressed their reservations about whether the scheme will succeed this season, as there is not much time left to roll it out effectively for the upcoming kharif harvest.

As the harvest of oilseeds is about to start in the next few weeks, it is expected that arrivals would flood the markets by the end of October. Without proper guidelines in place, farmers will once again be forced to sell their produce in the open market and they are likely to incur losses.

Yogesh Thorat, managing director of MahaFPC, the umbrella body of Farmers Producer Companies (FPCs) in the state, has submitted that these schemes would require detailed planning, and this would involve demarcation of areas of operations and declaration of yield per district. In a paper submitted to Niti Ayog, Thorat has called for proper coordination between various agencies, with the government identifying and recognising the role of every agency.
FPCs can also play an important role and act as the link between farmers and procurement agencies, said Thorat.

However, like the previous year, the state government is yet to recognise the FPCs as state-level nodal agencies and allow them to participate in the procurement process. It also has to assign responsibilities to various agencies for the process, raising questions about whether these steps will be taken in time to make the process successful.

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