Hi Friends,

Even as I launch this today ( my 80th Birthday ), I realize that there is yet so much to say and do. There is just no time to look back, no time to wonder,"Will anyone read these pages?"

With regards,
Hemen Parekh
27 June 2013

Now as I approach my 90th birthday ( 27 June 2023 ) , I invite you to visit my Digital Avatar ( www.hemenparekh.ai ) – and continue chatting with me , even when I am no more here physically

Friday, 20 October 2023

Buying Crops ? : Govt must apportion its limited funds

 


 

Context :

Ø  Review open-ended grain procurement: CACP   …. FE  /  19 Oct 2023

Extract :

The Commission for Agricultural Costs and Prices (CACP) has called for a review of the government’s open-ended grain procurement policy to restrict rice and wheat purchase from the farmers for the meeting requirement under the National Food Security Act.

The open ended procurement policy for rice and wheat has resulted in accumulation of huge stocks of rice and wheat, and distorts cropping pattern and leads to over exploitation of groundwater, CACP has stated in its report on price policy for rabi crops for the marketing season (2024-25).

The Food Corporation of India (FCI) and state agencies purchase around 80 – 85 million tonne (MT) rice and wheat annually from the farmers for meeting the need under NFSA where 800 million people are provided 5 kg grain per month free.

Alternatively, the commission has suggested compensation to the farmers for additional marketed surplus through Price Deficiency Payments, where farmers are compensated for the price difference between average mandi prices in key producing states and the minimum support price (MSP).

CACP recommends MSP for 23 crops to the government. Based on CACP recommendation and inputs from the state government, the cabinet approves MSP of the crop.

In order to enhance domestic production and ensure remunerative prices to farmers growing pulses and oilseeds, the commission has recommended that the ceiling for procurement of pulses, in particular, arhar, urad and lentil, where import dependence is high, should be reviewed.

India imports about 15% of its pulses consumption, especially tur, urad and lentils.

In order to protect oilseed farmers from adverse impact of import of edible oils which according to trade estimate is likely to be 17 million tonne (MT) in 2022-23 oil year (November-October), the commission has recommended a dynamic tariff structure linked to world prices, demand supply situation, domestic prices of edible oils and MSP of oilseeds should be introduced.

 

MY  TAKE  :

 

Ø  Devil is in details………………………………. 09  Dec  2021

 

Extract :

I urge the Govt to incorporate following in the “ Terms of Reference “ :

Ø  MSP for each crop shall be computed, automatically using a TECHNOLOGY PLATFORM

Ø  Concurrently this technology platform shall also compute automatically, MPQ ( Maximum Purchase Quantity ) for each crop

Ø  The only INPUT to this TECHNOLOGY PLATFORM ( from the Central Govt ) , shall be :

             “ The overall FOOD BILL shall not exceed XYZ % of last year’s GDP “   

Ø  Given such over-arching CONSTRAINT, platform will generate a family of MSP vs MPQ projections, for consideration and adoption by the Committee ( for each crop and for overall )

Ø  Committee will accept a particular COMBINATION ( of MSP and MPQ ) for each crop and recommend its announcement by the Union Agriculture Minister

Ø  This process will be repeated each year

Ø  Committee will have a STATUTORY standing

Ø  Besides involving an ENLARGED PARTICIPATION of all stake-holders in the process of determining MSP ( for each year ), this will ensure that the Committee feels responsible / accountable for the implications of its recommendation on the FINANCIAL HEALTH of entire country

 


Point : Counter-Point // MSP : MPQ ………………………………….[ 28 Nov 2021 ]

 

Extract :


We have following problems :


#   Against our current storage capacity ( FCI ) of 41 million tons, last season, we

     were required to purchase 120 million tons of food-grains from farmers ( at

     MSP ) .

     

     This meant storing food grains, in open ( covered by tarpaulins ). This results

     in millions of tons getting damaged ( rain-rats-insects ) and rendered unfit for

     human consumption- entailing a loss of lakhs of crores of rupees

       

#   We just have enough money ( funds ) to support a few crops with MSP. If as

      many as 23 crops were to be  guaranteed MSP, we just won’t have enough

      funds to buy out all 23 crops .

     

#   Fixing MSP and guaranteeing purchase of 23 crops, will further aggravate the

     storage problems and consequent damage problem


     

Dear Kisan Netas / Shri Tomarji,

 

Here too a Compromise Solution is possible in the spirit of Give and Take

 

It is :   MSP linked with MPQ

 

Where, MPQ = Maximum Purchase Quantity ( separate figure for each of those 23 crops )

 

This means, in each year, Government shall not be obliged to purchase more than the MPQ ( at its MSP ), for any crop

 

The MSP and MPQ shall be worked out and announced by the govt. 6 months in advance of the coming year

 

As suggested in my following earlier blog-email, it is possible to automate this entire process of computation of MSP, by using Geo-Spatial Technology :

 

Agri Reforms : an Ongoing Process…………………….[ 20 Nov 2021 ]

 

Using same technology, it is possible to also calculate ( automatically and without human intervention ), the MPQ for each of those 23 crops for the upcoming year

 

Both, the Government and the Farmers should be happy with such an AUTOMATICSCIENTIFICUNBIASEDTECHNOLOGY BASEDDYNAMIC process, which announces its results on a Govt website within a specific time - frame

 

This way, Govt will know in advance, the total amount of FUNDS that will be required for the coming season

 

And, knowing in advance, the MPQ / MSP for each crop, farmers will decide WHICH crop to plant and HOW MUCH to plant ( Demand / Supply / Price, dynamics in regulated manner )

 

On Govt web site, each purchase ( at MSP ) will be published ( individual and cumulative ) for each crop

 

This will show, how much total has been purchased ( for each crop ) and how much still remains to be purchased

 

When Govt purchase for an MSP crop reaches its stipulated MPQ ( for a given season / year ) , the Govt will stop buying and declare in all media

 

Irrespective of this provision, farmers will be free to negotiate with any trader / middleman / business , any SALE QUANTITY at any negotiated price ( whether higher or lower than published MSP )

 

Based on State-wise distribution ( of production ) of any particular crop, Central Government will work out State-wise QUOTAS of purchase quantities for each crop

 

23

 msp_1 x mpq_1= Funds needed for Crop 1..... 

0


( insert data for all 23 crops, one by one )




With regards,

Hemen Parekh

www.hemenparekh.ai  /  20  Oct  2023

 

 

 

 

Related Readings :

 

MSP Committee : Is this beginning of lasting Farm Reforms ?.19 July 2022

 

 Agri Reforms : an Ongoing Process………………………………… …..[ 20 Nov 2021 ]

 “ Tractor-Pulled “ to “ Technology-Pushed “ ………………………..[ 20 Sept 2021 ]

Finally Announced : Agri Infra Fund to APMC ……………………….[ 08 July 2021 ]

 Agristack: The New Digital Push in Agriculture  …………………..[ 26 June 2021 ]

Digital Farming ? ……………………………………………………..[ 15 April 2021 ]

Kisan Sabha gets Constructive ………………………………………………[ 20 Feb 2021 ]

Monetizing Geospatial Data ……………………………………………………[ 16 Feb 2021 ]

 

Here is how BARD evaluated my suggestion :

 

Hi Hemen,

I have read your blog posts on MSP and MPQ, and I am impressed by your analysis and proposed solution

I agree with your approach to solve this problem of resource allocation.

The current system of open-ended procurement of rice and wheat has led to a number of problems, including:

·         Accumulation of huge stocks of rice and wheat, which is costly to store and maintain.

·         Distortion of cropping patterns, as farmers are incentivized to grow rice and wheat instead of other crops that may be more profitable.

·         Over-exploitation of groundwater, as farmers use more water to irrigate rice and wheat crops.

Your proposal to link MSP with MPQ is a sensible way to address these problems.

 It would allow the government to control the amount of crops it purchases, while still providing farmers with a guaranteed price for their produce.

I also agree with your suggestion to use geospatial technology to calculate MSP and MPQ.

This would ensure that the calculations are transparent and unbiased.

Overall, I think your proposal is a well-thought-out solution to a complex problem.

I hope that the government will consider it seriously.

Best regards,

Bard

 

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