A reply to the editorial of thehindubusinessline

Rope in private players for crop purchases to make MSP effective: CACP chief

Dr Ashok Gulati 

Dr Ashok Gulati
New Delhi, March 21:
The Centre should rope in private corporates to procure grains, pulses and oilseeds on its behalf for more effective implementation of the minimum support price (MSP) mechanism, feels Dr Ashok Gulati, Chairman, Commission for Agricultural Costs and Prices (CACP).

“You can’t simply announce an MSP and forget about it. The Government is morally obliged to ensure that farmers get the declared floor price. If it cannot do that on its own, the job could be entrusted to private players on the same terms as offered to the Food Corporation of India (FCI) or Nafed (National Agricultural Cooperative Marketing Federation),” the head of the crop pricing advisory body told Business Line.

From storage to procurement

“When you have public private partnership (PPP) in storage, there is no reason why it cannot be extended to procurement and MSP operations. If the aim is to deliver MSP to farmers, does it matter whether it is done through FCI or ITC, Mahindra ShubhLabh and DSCL Hariyali Kisaan Bazaar?” Dr Gulati pointed out.

He illustrated the case of sunflower, where the Centre, in 2008-09, announced a steep MSP hike from Rs 1,510 to Rs 2,215 a quintal. But with no Government buyers, farmers realised less than Rs 2,000 even in Punjab, where they constitute a strong lobby.

The same story holds for pulses — the MSPs of which have been raised by 20-30 per cent this year — or paddy and wheat sold in eastern Uttar Pradesh (UP) and Bihar, where neither the FCI nor the State agencies open purchase centres during the harvesting season.

According to Dr Gulati, once big corporates — for that matter, even cooperatives and producers’ companies — are allowed to procure on Government account and guaranteed a minimum business based on competitive tendering and transparent rules of MSP enforcement, it will set off a virtuous process.

“You would incentivise the creation of a back-end infrastructure for marketing of farm produce, especially in crops and regions where MSP exists only in name,” he noted.

New revenue stream

If the Centre were to heed Dr Gulati’s advice, it would open up a new business opportunity for ITC, Hindustan Unilever and Britannia Industries, which today buy wheat mainly to meet their branded atta or bread requirements. These corporates also undertake exports and domestic trading of farm commodities on their own account.

Public-Private Partnership in MSP operations can potentially generate large revenues by way of commission fees. The Centre annually procures 25-26 mt of wheat and 45-46 mt of paddy. These purchases, at their current MSPs of Rs 11,200 and Rs 10,000 a tonne, are worth around Rs 75,000 crore.

“The system could be tried out first in States that have reformed their Agricultural Produce Marketing Committee laws to enable direct purchases from farmers. Low mandi levies and purchase taxes can be an additional inducement for corporates to go to UP and Bihar rather than Punjab and Haryana,” Dr Gulati added.

Private hand in procurement

With many regions lacking the agencies to enforce MSPs, it is time to rope private players into the business of buying on Government account.

March 24, 2011:

The Chairman of the Commission for Agricultural Costs and Prices, Dr Ashok Gulati, has recently called for involving private players in official crop procurement operations. He has a point. Everybody knows how ineffective and skewed the current minimum support price (MSP) mechanism is, being essentially confined to wheat and paddy. Even within that, more than half the rice for the Central pool is procured from Punjab and Andhra Pradesh, which account for hardly a quarter of the country’s total output. The imbalance is even more in wheat, where roughly 70 per cent of government purchases are from Punjab and Haryana. In all other crops and regions, there are no agencies to enforce MSPs that exist largely in name. Farmers are, hence, often at the mercy of traders during harvest time, with no means to stagger sales of their crop. Restricting the MSP’s effective scope to fine cereals also disincentivises cultivation of less water-intensive oilseeds, pulses, cotton or maize, the production of which are, moreover, not keeping pace with rising incomes and diversification of food baskets. Indeed, there is nothing more perverse than Punjab farmers mining already depleted groundwater reserves to grow paddy. But, then, they are only responding rationally to a system that has no Food Corporation of India (FCI) to pay MSP for arhar or sunflower.

That raises a question: Do we really believe only an FCI or a National Agricultural Cooperative Marketing Federation of India (Nafed) can deliver MSP to farmers? Why can’t the Centre also assign the task to private players which are already buying and selling farm produce for meeting their branded product requirements or for proprietary trading purposes? There is no reason for not roping them into the business of buying on Government account, as Dr Gulati has argued in an interview to this newspaper. As Deng Xiaoping said, the colour of the cat matters little so long as it catches the mice. And in the case of MSP, one can expect private corporates — having greater procedural flexibility and no legacy of excess manpower — to do at least a more cost-effective job.

Allowing the private sector to procure crops on behalf of the Government presents a potentially large revenue opportunity for agri-business corporates. Ideally, it should help throw up new players in this space similar to the fresh lot of contractors spawned by the National Highways Development Project or the Delhi Metro. But what a viable public private partnership model in official MSP operations can do, above all, is to stimulate the creation of much-needed backend agricultural marketing infrastructure. This is more pertinent to crops and regions where MSPs are just a mirage. Dr Gulati’s idea is certainly worth debating — and implementing.

A Reply to the Editorial of thehindubusinessline:

The editorial on thehindubusinessline.com dated 24th March 2011 “Private hand in procurement” posses several moot questions. The Govt of India has instituted MSP procurement for 15 Khariff Crops and 10 Rabi Crops. The system has been functioning for more than two decades though with lot of limitations. The Food Corporation of India, Nafed, Jute Corporation of India etc are the nodal agencies for procurement of Crops from the farmers at MSP rates. If properly monitored this system will be beneficial to the poor farmers who are usually subject to exploitation by traders and middlemen. Unfortunately there are several cases. Where even the officials connive with traders and both wisk away the real benefit that ought to have gone to the genuine farmers. Most drastically affected lot are small and marginal farmers. In this scenario I wonder what prompted CACP to make a suggestion that private hand in procurement in Official Operations.

How can one be sure that such a system will bring in benefit to the suffering farmers of India?

Become a member today

Yes, cows are coming to the Rodale Institute! We know a diversified farm is a healthy farm, and after years of building our soil and our research with cropping-systems only, it is time to invite grazing livestock back to the farm. This important work is one of the many ways in which we work to improve organic farming and food production. But we need your help.
Your membership makes possible new projects–like our dairy cow initiative– and ensures the continuation of our many other Rodale Institute initiatives in research, outreach and education.
Right now we’re preparing our fields to incorporate our neighboring farm’s dairy herd of 125 cows into our crop rotation.
Lean over the fence with our members-only newsletter to share in the progress of the herd and keep up-to-date on all the projects happening around the farm you’ve helped support.
Together we can:
Reveal the core benefits—environmental and economical—of an integrated crop and livestock rotation.
Share with farmers the benefits and best practices of incorporating grazing livestock back onto their land.
Spread the word by sharing our experiences and research findings with scientists, policy-makers, gardeners and consumers.
Secure the future of a healthy food supply.
Become a member today.
Our health depends upon it!

Kisan Swaraj yatra – coming to Kerala – Can we join the campaign

Dear Friends,

I hope you remember that since the last year and earlier this year, we all joined the  campaign against G M crops in India.  The response was very encouraging and we were able to communicate message to the people, media as well as to state govt. Although with the active efforts of Minister of Environment and Forest Mr. Jaiam Ramesh Govt. of India and with active support of State Governments like Kerala, has temporarily stopped the commercial cultivation of GM Brinjal but many other issues are still there which needs strong discussion and advocacy. Alliance for Sustainable & Holistic Agriculture (ASHA), a network of individuals and organizations across the country that has grown out of this movement has decided to initiate these issues.

The Alliance for Sustainable & Holistic Agriculture (ASHA), has announced that a Kisan Swaraj Yatra would set off from Sabarmati Ashram on October 2nd 2010, to remind all Indians of our hard-won independence and the insidious ways in which agri-business corporations, supported by the State are taking this independence and sovereignty away, especially with regard to our food and farming. This Yatra is a call for joining forces to save Indian farming and farmers mired in deep distress and to forge a sustainable path forward for Indian farming.

The Yatra will highlight issues such as seeds sovereignty, land grab, climate change, food sovereignty and security, GE seeds, chemical pesticides, farm produce pricing, etc. that directly and indirectly affect small farmers in addition to bringing up a debate around the proposed Green Revolution in Eastern India, the tie-ups that several governments have with MNCs like Monsanto, the continuing saga of farmers suicides and so on.

The Yatra will also raise the concerns over free trade and bilateral agreements, the proposed food security and seeds laws, BRAI Bill, the handing over of public resources for private gains etc. The Kisan Swaraj Yatra will also draw in urban consumers into its fold and will raise issues of food safety, consumer choices etc. The Yatra will celebrate the conservation of diversity by farmers, farmers knowledge and will highlight the successes of ecological farming. The participants will develop concurrent events, programmes, campaigns in accordance with the needs and priorities in their respective states.

The Yatra will visit Kerala from 26th to 29th of October. A concept note in English is attached. We have to plan the programmes for Kerala.  The Yatra will travel through Kasaragod, Kannur, Kozhikode, Malappuram and Palakkad.

To plan this we are calling a meeting along with Jaiva Karshaka Samithi and One Earth One Life on 15th September 2010 at Kozhikode at 11.00 am.  Please ensure you are able to participate in this meeting.  Please call Sridhar ( 09995358205) for details of venue of this planning meeting.
Hope for an active participation, cooperation and involvement in the Kisan Swaraj Yatra. At the bottom  is the concept note, travel details and a press release.

Usha S (9447022775)
Sridhar R (9995358205)

H-3, Jawaharnagar, Kawdiar P.O. Thiruvananthapuram, Kerala
India PIN 695 003
Tel / Fax: +91 471 2727150
Email: mail.thanal@gmail.com

Concept note, travel details and a press release.

swaraj yatra-concept note-aug.25

KSY anncmnt-PR-aug.25

Natural Rubber Prices

A letter send to Google Groups like FEC and Trivandrum Bloggers

Prices for the month of July 2010: http://spreadsheets.google.com/pub?key=0AjJUDQUJ7CS-dG9jTldCTzVHbXlEbU50WFE1ZENUT0E&hl=en&gid=5

The average price of Latex 60% drc changed at a higher level of Rs. 20375/Quintal. Can anybody say how it happens?

The leaders of Political Parties are against Import of Natural Rubber of One Lakh Tonnes at 7.5% Import Duty. But this import will be a reason for the price hike of International Price. The Domestic prices were higher at earlier month with a difference approximately Rs. 30/Kg when Indian Rubber Board Published the highest month end stocks. The Price difference between RSS 4 and Vyaapari Vila of Manorama (Which is not covered by the Board or on any Govt records) is varying according to their plans of the Biggest Manufacturer in India. Eg. Prices of June 2010 with a difference approximately Rs. 5 per Kg and Aug 2010 with a difference above Rs. 15 per Kg on many days of the month. If a manufacturer can play a game on prices where grading under the pretext of visual grading system we can imagine what will happen.

My conclusion: If the month end stock published by the Rubber Board is higher through continuous Missing Figures and import in front of the season of peak production to bring the prices down to export on lower prices (by the co-operative societies to reduce the profit share to the Govt of Kerala) to bring down the International prices can’t fulfill.  Because RTI Act 2005 is available for us to get the details of Export which is controlled by the Rubber Board.

Sorry for my poor English.

WTO was a failure to reduce the prices of Agricultural Commodities and now the time is for ASEAN. Just wait and see what will happen.

See the compiled study by a farmer on Indian Rubber Statistics Click here >>>>

Decision on Commercialisation of Bt-Brinjal Part1

Article is posted in The Hindu


Decision on commercialisation of bt-brinjal part2

Previous Post


Decision on commercialisation of bt-brinjal part3

Previous Post



Get every new post delivered to your Inbox.