NEW DELHI (Commoditiescontrol) - The Maharashtra cabinet on Wednesday decided to amend the APMC Act making it illegal for any private trader to purchase any agriculture produce below the government-fixed MSP from the coming kharif harvest season.
The amendment said that any trader who fails to purchase farm goods at MSP could attract a jail-term of one-year or fine of Rs 50,000 depending upon the severity of the offence.
However, traders and industry players have strongly objected to the proposal on the grounds that interference in normal demand-supply mechanism in mandis could end up jeopardizing markets and make government the biggest buyer of commodities.
They opined that this type of measures should be taken across the country rather than taking only in Maharashtra. As it is only being implemented in Maharashtra, millers and traders will prefer purchases from other states.
Price discovery based on demand and supply is best done in the mandis and if government tries to artificially set a floor price for private traders, they would simply pull off, leaving the government with the sole responsibility to purchase at MSP.
Tur (pigeon pea), for instance, is currently trading in Maharashtra’s markets such as Akola, Latur and Amravati at Rs 3,600-3,700 per quintal – well below the Centre’s MSP of Rs 5,675 for 2018-19 or even last year’s Rs 5,450.
If the Maharashtra government’s new decision is enforced, private traders will have to purchase at the MSP, even if the market supply-and-demand conditions do not make it a viable proposition. But which trader will buy at the rate fixed by government?
So this move is likely to be counterproductive and the biggest hit will be taken by farmers as existing infrastructure with governerment agencies is not enough to procure entire produce from farmers.
As far as current market price is concerned it is ruling well below the MSP despite the government has taken several decisions in recent times. As per traders, although the government has announced various measures to support prices but at the same time Nafed is selling it at below the MSP. Apart from Nafed, the state government is also distributing tur through PDS at a subsidy of Rs 15 per kg. Until Nafed and state government don't stop selling below MSP, there will be lesser possibility of improvement in prices.
Moreover, mills have been allowed to import raw tur with condition of processing the same qunatity. But millers are selling the raw tur in market without processing it which is also making the supply heavier.
Restricted quantity of imports are also making things worse as it is arriving at markets below MSP. Illegal import from Nepal is also a cause for concern.
Traders pointed out that the National Agricultural Cooperative Marketing Federation of India – the apex government procurement agency for pulses and oilseeds – is disposing its tur stocks from purchases made in 2016-17 and 2017-18 at Rs 3,400-3,500 per quintal. Nafed is selling at a loss, which the government will most probably cover. But who will compensate millers/traders if they buy at MSP and sell at the rate that the market can bear?
Furthermore, many farmers who sold tur and chana (chickpea) to government agencies in 2017-18 are still to even receive their MSP payments. When the government itself is unable to the pay the MSP, how does it expect traders/millers to do so?
Today, both domestic and international commodity markets are depressed. Traders can pay higher prices to farmers only when they are able to sell at least at those rates.
(By Commoditiescontrol Bureau)
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