Minimum Support Prices for Agricultural Produce

What is Market Intervention Scheme (MIS)? How does it compare with MSP

Note4Students

From UPSC perspective, the following things are important :

Prelims level : Market Intervention Scheme

Mains level : Various price support mechanisms for farmers and issues in their implementation

Fruit and vegetable farmers are facing major losses due to obstacles in harvesting and marketing their perishable produce. The Centre has now directed all the States and UTs to implement the Market Intervention Scheme to ensure remunerative prices for perishable crops.

Market Intervention Scheme

  • MIS is a price support mechanism implemented on the request of State Governments for the procurement of perishable and horticultural commodities in the event of a fall in market prices.
  • It is implemented when there is at least a 10% increase in production or a 10% decrease in the ruling rates over the previous normal year.
  • MIS works in a similar fashion to Minimum Support Price based procurement mechanism for food grains but is an ad-hoc mechanism.
  • Its objective is to protect the growers of these horticultural/agricultural commodities from making distress sale in the event of the bumper crop.
  • Under MIS, support can be provided in some years, for a limited but defined period, in specified critical markets and by purchasing specified quantities. The initiative has to emerge from the concerned state.

UPSC Prelims can ask a question on the difference between MSP and MIP. All the agricultural and horticultural commodities for which Minimum Support Price (MSP) are not fixed and are generally perishable in nature are covered under Market Intervention Scheme (MIS).

Commodities covered

  • The MIS has been implemented in case of commodities like apples, garlic, oranges, grapes, mushrooms, clove, black pepper, pineapple, ginger, red-chillies, coriander seed, chicory, onions, potatoes, cabbage, mustard seed, castor seed, copra, palm oil etc.

Remuneration under MIS

  • MIS provides remunerative prices to the farmers in case of glut in production and fall in prices.
  • Proposal of MIS is approved on the specific request of State/UT Government, if they are ready to bear 50% loss (25% in case of North-Eastern States), if any, incurred on its implementation.
  • Further, the extent of total amount of loss shared is restricted to 25% of the total procurement value which includes cost of the commodity procured plus permitted overhead expenses.

Implementation of MIS

1) Market Intervention Price (MIP)

  • The Department of Agriculture & Cooperation is implementing the scheme.
  • Under the MIS, a pre-determined quantity at a fixed MIP is procured by NAFED as the Central agency.
  • There are other agencies designated by the state government for a fixed period or till the prices are stabilized above the MIP whichever is earlier.
  • The area of operation is restricted to the concerned state only.

2) Funds transfer

  • Under MIS, funds are not allocated to the States.
  • Instead, central share of losses as per the guidelines of MIS is released to the State Governments/UTs, for which MIS has been approved, based on specific proposals received from them.

The last 2 heads that you just read, Renumeration & Implementation, they have a lot of information on which you can be quizzed by UPSC Prelims. Make a note of the agency, %age share, state vs. center responsibility


Back2Basics: Minimum Support Price

  • Minimum support price (MSP) is one of the instruments of Agricultural Price Policy (APP).
  • The basic intent of announcing MSP before the sowing season is to help farmers take a sowing decision keeping in mind that if they are not able to get a reasonable price by selling in the market, at least they will be able to get the MSP.
  • In that sense, MSP is an assured or guaranteed price (insured price).

For additional reading on MSP, navigate to:

Price Support Mechanism under MSP Operations

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