MP re-opens price deficit financing window amid reports of farmers' angst

The Madhya Pradesh government will re-open registration for farmers wanting to opt for the Mukyamantri Bhavanthar Bhugthan Yojana (Chief Minister’s Price Deficit Financing Scheme) for a week, nearly a month after it was closed.

The window for registration will open on November 15 and close on November 22. Under the scheme, farmers get compensation if the price of a notified crop falls below a level. The reopening of the much talked about scheme comes amid talk of dissatisfaction among farmers after a sharp drop in prices of most kharif crops in the state.

The state government has also decided to activate sub-mandis and haat-bazaars (village-level markets) under the programme and the produce sold via these could be eligible for deficit payment. It has also decided to increase godown allowance to Rs 9.90 a quintal per month from Rs 7 a quintal per month, to incentivise growers who don’t want to sell their produce as part of the scheme.

Registration for the scheme had earlier closed on October 16. Around 1.9 million of the eligible 5.5-6 million oilseed and pulses growers in the state had registered.

 

What The Scheme Is All About

• CM’s Price Deficit Financing Scheme tries to address price risk to growers
• Eight commodities covered — four pulses, three oilseeds and one cereal
• Modal price, based on average price in nearby mandis and other parameters, to be lower than the MSP
• Compensation to be directly transferred into bank accounts of farmers

However, prices slumped sharply since kharif harvest of pulses and oilseeds started arriving in the markets. This led to allegations that traders in the state were forming cartels to artificially pull down prices, which was hurting those who hadn’t registered for the scheme. The state administration attributed the sharp drop in prices to a 23 per cent rise in arrivals in October 2017, against October 2016.

The price deficit scheme is an innovative concept floated by the Madhya Pradesh government to compensate farmers. Farmers get compensation if the price of a notified crop falls below the minimum support price or MSP within the two-month sale window starting October 16. But the compensation is capped at a pre-determined modal price. No payment will be made to unregistered farmers or to those who sell their produce outside the scheme window.

The scheme was approved by the state Cabinet in August to cover price risk of farmers who had been agitating for months against falling agriculture commodity prices.