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Union Cabinet approves new crop procurement policy, ethanol price rise

ET Online and Agencies|
Updated: Sep 12, 2018, 05.57 PM IST
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Cabinet nod for new procurement policy to ensure MSP to farmers
Cabinet nod for new procurement policy to ensure MSP to farmers
In relief to farmers a year before the general elections, the government has given its approval to the new procurement policy for crops. Also, the Cabinet has approved raising the prices at which the Oil Marketing Companies will buy ethanol from sugar mills to Rs 59.13 per litre from Rs 47.13 per litre.

The Cabinet has given approval to the new procurement policy which will ensure that the farmers get the minimum support price (MSP) at a time when the market prices fall below the benchmark prices set by the government.

Prime Minister Narendra Modi had announced a new procurement policy in July shortly after the government announced the biggest ever hike in MSP for 22 crops.

The new mechanism is expected to be crop specific. This will mark a significant departure from the current mechanism, under which the crops are purchased by the government and the MSP price is transferred to farmers' account through Direct Benefit Transfer.

The new mechanism is likely to cost the exchequer nearly Rs 40,000 crore and come into effect for the upcoming harvest of the Kharif season.

One scheme will focus on compensating oilseeds farmers if rates fall below the MSP, and another will allow states to rope in private players for procurement, PTI quoted sources as saying.

Under the new policy, the state governments will be given an option to choose multiple schemes to protect farmers when prices fall below the MSP.

A new scheme 'Price Deficiency Payment (PDP)' has been framed on the lines of Madhya Pradesh government's Bhavantar Bhugtan Yojana (BBY) to protect oilseeds farmers only.

Under the PDP, the government will pay to farmers the difference between the MSP and monthly average price of oilseeds quoted in wholesale market. This would be implemented for up to 25 per cent of the oilseeds production in a state.

Besides this, the states are given option to rope in private players for oilseeds procurement on a pilot basis.

Both PDP and private players' participation will be exclusively for oilseeds because the government wants to bring down the country's import dependence on cooking oils, the sources said.

Under the new policy, the states will also have an option to choose the existing Price Support Scheme (PSS), under which central agencies procure commodities covered under the MSP policy when prices fall below the MSP.

"The states can choose either PSS or PDP or engage private players in procurement to ensure MSP to farmers," the sources added.

The Food Corporation of India (FCI), the government's nodal agency for procurement and distribution of foodgrains, already procures wheat and rice at MSP for supply through ration shops and welfare schemes.

The centre also implements Market Intervention Scheme (MIS) for procurement of those commodities, which are perishable in nature and are not covered under the MSP policy.

Under the MSP policy, the government fixes the rates for 23 notified crops grown in kharif and rabi seasons.

(With inputs from PTI)

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Union Cabinet approves new crop procurement policy, ethanol price rise

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