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Credit seminar on price deficiency payment scheme, Study Guides, Projects, Research of Agricultural economics

Rajendra Agricultural UniversityAgricultural economics

Price deficiency payment scheme

Typology: Study Guides, Projects, Research

2019/2020

Uploaded on 06/25/2020

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AN ANALYSIS OF PRICE DEFICIENCY PAYMENT
SYSTEM WITH SPECIAL REFERENCE TO BHAVANTAR
BHUGTAN YOJANA IN MADHYA PRADESH”
CREDIT SEMINAR
ON
Satyam Nema
(1803201012)
Reg.No. – M/AE/277/2018-19
M.Sc. IInd Yr (Agricultural
Economics)
Department of Agricultural
Economics
Dr. Rajendra Prasad Central
Agricultural University Pusa
Samastipur (Bihar)
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A N ANALYSIS OF PRICE DEFICIENCY PAYMENT

SYSTEM WITH SPECIAL REFERENCE TO BHAVANTAR

BHUGTAN YOJANA IN MADHYA PRADESH”

CREDIT SEMINAR ON Satyam Nema (1803201012) Reg.No. – M/AE/277/2018- M.Sc. IInd Yr (Agricultural Dr. Rajendra Prasad Central Agricultural University Pusa Samastipur (Bihar)

The Niti Aayog, has recently released a three-year action agenda for the Centre suggesting the 'Price Deficiency Payment' (PDP) system among other reforms. What is Price Deficiency Payment system?

  • Under this, farmers will be compensated for the difference between the MSPs for select crops and their actual market prices.
  • For crops such as rice and wheat where MSP is effective now, the same will continue.
  • For other targeted crops, price deficiency payments system will be introduced.
  • However, notably there may be a cap on the extent to which the Centre will bridge the gap between MSP and market price. How to avail the Price Deficiency Payment? To avail this scheme,
  • A farmer would have to register with the nearest APMC mandi and report the total area sown, to avail this benefit.
  • The subsidy would be paid via Direct Benefit Transfer (DBT) into the farmer’s Aadhaar-linked bank

What are the benefits?

  • Subsidy Bill - The government has been accumulating large food grain stocks in its godowns over and above the

buffer requirement, leading to storage and wastage costs.

  • Under the new system, the government can pay in cash to farmers, the difference between the support and market

prices.

  • This will actually reduce the need for the government to procure food crops, transport and store them, and then

dispose of them under PDS.

  • Resultantly, as Niti Aayog proposes, this system can keep India’s bill on food subsidies, and storage and wastage

costs under check.

  • It can also address to an extent the world nations' concern on India’s procurement subsidies being trade-distorting.
  • MSP - The MSP system has many flaws in execution which include:

1.limited geographical coverage.

2.actual procurement being restricted to a few crops such as paddy and wheat despite announcements for 20-plus

crops.

3.skewed cropping pattern in favour of rice and wheat as a result of this.

4.soil degradation and susceptibility of crops to pest as a result of this monoculture, leading to higher usage of

chemical fertilisers and pesticides.

  • The PDP system is expected to address these shortfalls and negative results of MSP scheme.

Schemes launched by state governments Mukhya Mantri Bhavantar Bhugtan Yojana The first is the Bhavantar Bhugtan Yojana (BBY), essentially a price deficiency payment (PDP) scheme, being undertaken by the government of Madhya Pradesh. BBY applies to eight kharif crops — soybean, maize, urid, arhar, moong, groundnut, til, ramtil. Bhavantar Bharpai Yojana The Haryana Government launched country’s first ‘Bhavantar Bharpai’ a scheme which would come into effect in January through which the state government would compensate farmers for price deficit for agricultural produce in which tomato, onion, potato and cauliflower have been included. It is applicable only to farmers growing vegetables. Karnataka begins Price Deficiency Payment system for onion Karnataka is the first State implementing the new system in a full-fledged manner for perishable commodity like onion, said Karnataka Agricultural Price Commission chairman T.N. Prakash Kammaradi. As per the KAPC’s recommendations, the Karnataka government issued a notification on November 27 announcing the scheme for onion in the markets of Gadag, Bagalkot, Dharwad, and Belagavi districts from November 28 to December 12. Under the new system, the government has fixed the support price level for onion at ₹700 a quintal and the Price Deficiency Payment level at ₹200. This means that farmers get cash benefit of ₹ if the onion price rules around ₹500 in the market. As the maximum benefit level is fixed at ₹200. The scheme is expected to cost ₹50 crore to ₹75 crore, which would be used from a revolving fund.

Crops under MBBY: Sl.No Kharif Crops Rabi Crops Moong Wheat Urid Gram Arhar Lentil Soybean Mustard Peanut / Groundnut Garlic Maize Onion Ramtil – Til seed / Sesame Seed – Mukhya Mantri Bhavantar Bhugtan Yojana Compensation for Kharif Crops: As stated under the MBBY scheme, the farmers will be given remuneration of an amount that is the difference between the MSP and model price. To avail, the benefits of the scheme farmers are required to register for MBBY scheme and sell their crops at registered agricultural markets. The government will procure the produce from farmers. Compensation for Rabi Crops: Under MBBY, the Government does not buy Rabi crops from farmers. Instead of that, when prices fall below the minimum support price (MSP) for these crops, Government pays the remuneration as the difference between the minimum support price and the model rate. It can be computed by taking the average of selling price in mandis in three states over a fixed period.

Documents Required for Registration:

  • Residence Certificate
  • Aadhar Card
  • Bank Account Book Account Number, Branch Name, IFSC Code etc)
  • Land Documents/Measurement of Land under cultivation How to Register Offline?
  • Collect the forms from the Panchayat Offices, an office of the District Collector, Block Offices etc.
  • All necessary details like Name, Address, Phone Number, Age, and other personal details are to be filled in the form.
  • The bank details like Account Number, IFSC Code, MICR Code, Branch name etc are also to be filled carefully.
  • The application form should also contain details of cultivation done along with the measurement of land used for cultivation. Bhavantar Yojana Portal Registration
  • Visit the official website of MP e-Uparjan i.e. http://mpeuparjan.nic.in/mpeuparjan/Home.aspx
  • Click on “wheat 2018-19 Farmer Registration Application Link” under the Wheat Section as shown in the figure below:
  • The Wheat Procurement Monitoring System 2018-19 will be shown
  • ON this page select “Get Information related to wheat farmer registration”
  • Enter Kisan Code and Captcha and click on “Register”.
  • Fill all the details in the Application Form correctly i.e. Bank Details and Land Details.
  • Finally, click on the “Secure” button to complete the registration process. Farmers have to then take print out of this form and show it at the time of purchase. Follow all the above steps for rest of the crops. For further assistance, you can directly call at the Helpline Number: 0755-

Crops Maize^ Urid^ Moong^ Arhar^ Soybean^ Groundnut^ Sesamum^ Nigerseed

Production (Lakh

MT)

Registered

Production (lakh

MT)

Registered market

arrivals (Lakh MT)

5.45 5.69 0.02 NA 12.84 0.14 0.001 0.

Mandi Prices in MP

(Rs/ quintal)

No. of registered

farmers (Lakhs)

Total cropped area

(Lakh ha)

Registered area

(Lakh ha)

Compensation

actually paid (Rs

crore)

154 1297 3 NA 471 11 0 0

Compensation that

would have been

paid if entire

produce was to be

covered under BBY

(Rs crore)

1388 4037 216 NA 2547 283 0 0

Total compensation

that could have been

paid for all crops

8470 Crore

Crop wise details for the BBY scheme kharif 2017-

P r odu cti on ( Lak h MT)

Maize Urad Moong Arhar Soybean Groundnut Sesamum Nigerseed

Registered market arrivals (Lakh MT)

Maize

Urad

Moong

Arhar

Soybean

Groundnut

Sesamum

Nigerseed

Maize Urad Moong Arhar Soybean Groundnut Sesamum Nigerseed

No. of registered farmers (Lakhs)

            • 0.43 0.

Maize

Urad

Moong

Arhar

Soybean

Groundnut

Sesamum

Nigerseed

0 500 1000 1500 2000 2500 3000 3500 4000 4500

Com pensation that would have been paid if entire pr oduce was to be covered under BBY (R s cr or e)

Maize Urad Moong Arhar Soybean Groundnut Sesamum Nigerseed

Compensation actually paid (Rs crore)

Maize Urad Moong Arhar Soybean Groundnut Sesamum Nigerseed

1388 4037 216

2547 283 0 0

Compensation that would have been paid if entire produce was to be covered under BBY (Rs crore)

Total compensation that could have been paid for all crops – 8470 Crore

STEP -C- Calculate compensation for three scenarios

  1. First scenario is when the prices are 10 percent below MSP.
  2. Second scenario is when prices are 20 percent below MSP.
  3. Third scenario is when prices are 30 percent below MSP.
  4. We compute the difference between the prices computed in the previous steps with that of the projected MSP.
  5. The difference in the three prices is multiplied by net availability computed in STEP- B.
  6. The sum of the total compensation for all crops is equal to PDP compensation.

Steps to

Calculate the

BBY

Compensation

Calculate Projected MSPs for 2019- Calculate Net availability Calculate Compensation for three scenarios

MSP projections for 2018-

MSP projection

A2+FL (2018-19) (Rs/q) MSP(2018-19) Rs/q Projected A2+FL (5 % high) (Rs/q) Projected MSP (50 % higher than projected A2+FL) (Rs/q) col [5]-col [3] (Rs/q) Projected MSP if A2+FL<MSP (5% rise over current MSP for wheat, unchanged for others) (Rs/q) Projected MSP (Rs/q) Projected MSP- old MSP (Rs/q) % increase in MSP

Paddy Common 1117 1550 1172 1759 209 0 1759 209 14 Paddy Grade A 1117 1590 1172 1759 169 0 1759 169 11 Wheat 817 1735 857 1286 -449 1822 1822 87 5 Jowar Hybrid 1556 1700 1633 2450 750 0 2450 751 44 Jowar Maldandi 1556 1725 1633 2450 725 0 2450 726 42 Bajra 949 1425 996 1494 69 0 1494 70 5 Maize 1044 1425 1096 1644 219 0 1644 219 15 Ragi 1861 1900 1954 2931 1031 0 2931 1031 54 Arhar 3318 5450 3483 5225 -225 5450 5450 0 0 Moong 4286 5575 4500 6750 1175 0 6750 1175 21 Urad 3265 5400 3428 5142 -258 5400 5400 0 0 Groundnut 3159 4450 3316 4975 525 0 4975 525 12 Soybean 2121 3050 2227 3340 290 0 3340 291 10 Sunflower 3481 4100 3655 5482 1382 0 5482 1383 34 Cotton Medium Staple 3276 4020 3439 5159 1139 0 5169 1140 28 Cotton Long Staple 3276 4320 3439 5159 839 0 5169 840 19 Barley 845 1410 887 1330 -80 1410 1410 0 0 Gram 2461 4400 2584 3876 -524 4400 4400 0 0 Lentil 2366 4250 2484 3726 -524 4250 4250 0 0 Rapeseed &Mustard 2123 4000 2229 3343 -657 4000 4000 0 0 Safflower 3125 4100 3281 4921 821 0 4922 822 20 Sesamum 4067 5300 4270 6405 1105 0 6406 1106 21 Nigerseed 3912 4050 4107 6161 2111 0 6161 2111 52 Sugarcane 145 255 152 228 -27 255 255 0 0