The Commission for Agricultural Costs and Prices (CACP) recommended that the Centre fix a reserve price for sale of pulses and oilseeds by Nafed and not sell them in the open market during the procurement season.

It has called for review the fertiliser pricing and stressed upon the need for a shift to direct beneficiary transfer (DBT) of the subsidy. The panel has recommended that farmers should be provided a subsidy of ₹4,585 per hectare so that they could apply nutrients of their choice.

In its non-price policy recommendations for the rabi marketing season 2021-22, CACP said the Centre should trim the food stocks to ease storage and avoid large carrying costs. Despite additional allocation of foodgrains free of cost to all beneficiaries of the targeted public distribution system under Pradhan Mantri Garib Kalyan Anna Yojana and to migrants under Atma Nirbhar Bharat Package, the wheat stocks are estimated to be much larger than the usual 13.8 million tonnes on January 1, 2021, CACP said.

CACP reiterated its earlier recommendation that excess stocks need to be urgently liquidated, as it will help ease storage capacity constraint. However, it said the reserve price, which has not been revised for 2020-21, should not be reduced as it would discourage procurement by private sector in future.

Reserve price

The commission observed that the stocks of pulses and oilseeds procured under Price Support Scheme (PSS) have continued to pose problem of disposal for Nafed as stocks are sold at discounted price, well below the MSP. As a result, it depresses market prices and discourages private sector to procure directly from farmers. “The Commission strongly feels that government should not sell these stocks in open market below the MSP, particularly during the procurement season and fix a reserve price linked to MSP for disposal of stocks as is being done for wheat and rice under OMSS,” it said.

CACP also recommended that the Centre review its open ended procurement policy. “Due to increased procurement of wheat and rice in recent years, Government has emerged as the single largest buyer of foodgrains. In major wheat producing states like Madhya Pradesh, Punjab and Haryana, the Government procures more than three-fourth of marketed surplus due to open-ended procurement policy. This policy is driving out private sector from the market and has adversely affected crop diversification,” it observed.

Fertiliser subsidy

It observed that after introduction of Nutrient Based Subsidy policy, retail prices of Phosphatic and Potassic (P&K) fertilisers have risen sharply, while that of urea (N) has remained static. This has led to reduction in consumption of P and K fertilisers resulting in large imbalance of major plant nutrients and deficiency of various micro-nutrients.

The Commission recommended that a subsidy of about ₹5,000 per year (average farm size of 1.08 ha x average subsidy of ₹4,585/ha) should be transferred to all farmers in two instalments of ₹2,500 each at the beginning of kharif and rabi seasons, it said.