Trade and markets
 

Detail

Area
India
Commodity Group
Oilseeds, oils and meals
Commodity
Oilseeds
Date
18/09/2018
Policy Category
Stocks
Policy Instrument
Public procurement
Description
Reformed its procurement policy for agricultural crops with a focus on those where domestic demand exceeds local supplies, including a couple of oilseed specific schemes, with a view to helping to raise farmers\' incomes by covering gaps in existing public procurement and compensation mechanisms.
Notes
In line with earlier announcements (see MPPU May’18), India’s Central Government has reformed its procurement policy with a focus on crops where domestic demand exceeds local supplies, notably oilseeds, copra and pulses. To cover gaps in the existing public procurement and compensation mechanisms and help raise farmers’ incomes, three types of procurement will be implemented. First, the Centre’s Price Support Scheme (PSS) will be extended to oilseeds, copra and pulses, with nodal procurement agencies undertaking physical procurement and farmers receiving the official minimum support prices (MSP) for their crops (see MPPU Aug.’18 for the latest Kharif crop MSP rates). Importantly, PSS purchases will only be effected up to 25 percent of a state’s oilseeds production. Second, the Centre will implement a Price Deficiency Payment Scheme (PDPS) earmarked specifically for oilseeds. Under the scheme, farmers will be paid the difference between the relevant MSP and actual selling prices (recorded within notified periods in specified markets), with payments being made directly into farmers’ bank accounts. Third, again oilseed-specific but this time at state-level and on a pilot basis only, a Private Procurement and Stockist Scheme (PPSS) will be rolled out in select districts. Under this scheme, when market prices drop below MSP level, a private player can procure crops (in notified markets and periods) at the existing MSP rates. Subsequently, such buyers will be compensated through a service charge equivalent to up to 15 percent of the MSP. Regarding PPSS, market experts pointed out that past experience of engaging private players in procurement operations for wheat and rice has been mixed so far, with commercial viability, delays in state payments and storage space shortages identified as main challenges.