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Direct Payment Of Minimum Support Price (MSP)

Direct Payment Of Minimum Support Price (MSP)

Why in news?

  • The Punjab government has told the central government that it will pay the Minimum Support Price (MSP) directly into the accounts of farmers from this procurement season.
  • But it also does not want to annoy the Arhtiyas (commission agents) who earlier used to pay the farmers and are opposing the direct payment.
  • Punjab CM said the State Food Department has amended the procurement software so that the Arhtiyas will continue to be involved even in the direct payment process.

Involvement Of Arhtiyas In The Direct Payment System

  • In Punjab, there are around 28,000 registered Arhtiyas and each of them has 20 to 200 farmers associated with them.
  • Earlier, the farmers’ payments used to come in the accounts of the Arhtiyas who used to give cheques to individuals.
  • Now, the amount will come directly in the accounts of the farmers, but after the Arhtiyas has clicked a pay now button.
  • The Arhtiyas have to click on the ‘Pay Now’ option within 48 hours, failing which the amount will be credited directly to the accounts of farmers in 72 hours.

Recent orders from FCI

  • The Centre wants to make direct online MSP payment to farmers’ bank accounts, to remove middlemen from the process.
  • MSP is the price that government agencies pay whenever they procure the particular crop.
  • Currently, arhtiyas (commission agents) get the payments in their accounts, which they in turn pay to farmers through cheques.
  • The Centre has to pay 2.5% commission to arhtiyas who facilitate procurement of the crop from farmers to government agencies and take commission for that from the government.

Issue Of Middlemen

  • Arhtiyas (middlemen) are important in Indian agricultural markets.
  • They are a part of the supply chain in north-west India.
  • Here they are not like the middlemen elsewhere.
  • They function simply as agents of the procurement agencies.
  • This was done by the past government to reduce overhead costs of procurement.

What is MSP?

  • MSP is the minimum price which the government pays for the farmers’ produce at the time of procurement. It is aimed at saving the crops from price fluctuations in the market.
  • The MSP fixed by the government is considered as being remunerative for farmers.
  • However, MSPs do not have legal backing.            Direct Payment Of Minimum Support Price (MSP)

Challenges to the FCI Order

  • Since arhtiyas play a key role in the Punjab and Haryana farm ecosystem by providing farm loans, the move has been opposed by a large section of farmers, as well as the Punjab government.
  • According to farm unions, implementing direct payment in haste can lead to many complex problems that will exclude so many farmers from getting their price of the crop.
  • Thousands of sharecroppers do not have Jamabandhi or legal agreements and will be hit hard.
  • The FCI’s proposals to tighten quality requirements for wheat and paddy procurement are also being opposed.
  • At a broader level, farmers connected their issues with the FCI with their existing demands to repeal the farm laws and enact a legal guarantee for procurement of all crops and minimum support prices.

Farmer’s Response To New Modification

  • Farmer leaders said most of the Arhtiyas have already got the advance cheques signed from the farmers when they give money to them on loan and when they will get a message on the portal that farmers’ money is being transferred in the account of farmers, then they will get those advance cheques encashed.
  • Farmers feel that the direct payment will stop the loot by Arhtiyas to some extent.
  • Earlier everything was in the hands of the Arhtiyas who used to make payment.
  • Now the farmers will also have the bargaining power if Arhtiyas overcharge.
  • Farmers are in favour of direct payment but the timing which the Centre has chosen is not right given the ongoing farmers protests which has the support of the Arhtiyas.
  • The Arhtiyas provide various services in the mandis from unloading to cleaning, weighing, filling and loading the crop to government godowns in lieu of which the government pays 2.5% commission to them.



Mussoorie Times

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