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Subject: Agriculture

  • Price Support Mechanism under MSP Operations

    The Centre will spend â‚č1,061 crore to reimburse the Cotton Corporation of India (CCI) and its sub-agent in Maharashtra for procuring cotton at the minimum support price in that State since 2014.

    Why Centre reimburses to states?

    In the event of fall in market prices, the Centre intervenes through following schemes-

    Market Intervention Scheme

    • Similar to MSP, there is a Market Intervention Scheme (MIS), which is implemented on the request of State Governments for procurement of perishable and horticultural commodities in the event of fall in market prices.
    • The Scheme is implemented when there is at least 10% increase in production or 10% decrease in the ruling rates over the previous normal year.
    • Proposal of MIS is approved on the specific request of State/UT Government, if the State/UT Government is ready to bear 50% loss (25% in case of North-Eastern States), if any, incurred on its implementation.
    • 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.

    Price Supports Scheme (PSS)

    • The Department of Agriculture & Cooperation implements the PSS for procurement of oil seeds, pulses and cotton, through NAFED which is the Central nodal agency, at the MSP declared by the government.
    • NAFED undertakes procurement as and when prices fall below the MSP. Procurement under PSS is continued till prices stabilize at or above the MSP.
    • Losses, if any incurred by NAFED in undertaking MSP operations are reimbursed by the central Government.
    • Profit, if any, earned in undertaking MSP operations is credited to the central government.

    Back2Basics

    Minimum Support Price (MSP)

    • MSP is a form of market intervention by the GoI to insure agricultural producers against any sharp fall in farm prices.
    • The MSP are announced at the beginning of the sowing season for certain crops on the basis of the recommendations of the Commission for Agricultural Costs and Prices (CACP).
    • MSP is price fixed to protect the producer – farmers – against excessive fall in price during bumper production years.
    • In case the market price for the commodity falls below the announced minimum price due to bumper production and glut in the market, govt. agencies purchase the entire quantity offered by the farmers at the announced minimum price.
    • The minimum support prices are a guarantee price for their produce from the Government.
    • The major objectives are to support the farmers from distress sales and to procure food grains for public distribution.

    Methods of calculation

    • In formulating the level of MSP and other non-price measures, the CACP takes into account a comprehensive view of the entire structure of the economy of a particular commodity or group of commodities.
    • The CACP makes use of both micro-level data and aggregates at the level of district, state and the country.
    • Other factors include cost of production, changes in input prices, input-output price parity, trends in market prices, demand and supply, inter-crop price parity, effect on industrial cost structure, effect on cost of living, effect on general price level, international price situation, parity between prices paid and prices received by the farmers and effect on issue prices and implications for subsidy.

    Procurement agencies

    • Food Corporation of India (FCI) is the designated central nodal agency for price support operations for cereals, pulses and oilseeds.
    • Cotton Corporation of India (CCI) is the central nodal agency for undertaking price support operations for Cotton.

  • [pib] Desertification and Land Degradation Atlas of India

     

    The Union Minister for Agriculture and Farmers Welfare has provided useful information about land degradation in India citing the Desertification and Land Degradation Atlas.

    Desertification and Land Degradation Atlas of India

    • Space Applications Centre (SAC), ISRO has released out an inventory and monitoring of desertification of the entire country in 2016.
    • This Atlas presents state-wise desertification and land degradation status maps depicting land use, process of degradation and severity level.
    • This was prepared using IRS Advanced Wide Field Sensor (AWiFS) data of 2011-13 and 2003-05 time frames in GIS environment.
    • Area under desertification / land degradation for the both time frames and changes are reported state-wise as well as for the entire country.

    Degraded land in India

    • About 29.32% of the Total Geographical Area of the country is undergoing the process of desertification/land degradation.
    • Approximately 6.35% of land in Uttar Pradesh is undergoing desertification/degradation.

    Various move for land conservation

    • National Afforestation & Eco Development Board (NAEB) Division of the MoEFCC is implementing the “National Afforestation Programme (NAP)” for ecological restoration of degraded forest areas.
    • Various other schemes like Green India Mission, fund accumulated under Compensatory Afforestation Fund Management and Planning Authority (CAMPA), Nagar Van Yojana etc. also help in checking degradation and restoration of forest landscape.
    • MoEF&CC also promote tree outside forests realizing that the country has a huge potential for increasing its Trees Outside Forest (TOF) area primarily through expansion of agroforestry, optimum use of wastelands and vacant lands.

    Various institutions for land conservation

    • Indian Institute of Soil and Water Conservation (IISWC): Bio-engineering measures to check soil erosion due to run-off of rain water
    • Central Arid Zone Research Institute (CAZRI), Jodhpur: Sand dune stabilization and shelter belt technology to check wind erosion
    • Council through Central Soil Salinity Research Institute, Karnal: Reclamation technology, sub-surface drainage, bio-drainage, agroforestry interventions and salt tolerant crop varieties to improve the productivity of saline, sodic and waterlogged soils in the country

  • Essential Commodities

    The Price Monitoring Division (PMD) in the Department of Consumer Affairs is monitoring the retail and wholesale prices of 22 essential food commodities due to increased panic buying by customers.

    Essential Commodities Act

    • The ECA is an act which was established to ensure the delivery of certain commodities or products, the supply of which if obstructed owing to hoarding or black-marketing would affect the normal life of the people.
    • The ECA was enacted in 1955. This includes foodstuff, drugs, fuel (petroleum products) etc.
    • It has since been used by the Government to regulate the production, supply and distribution of a whole host of commodities it declares ‘essential’ in order to make them available to consumers at fair prices.
    • Additionally, the government can also fix the maximum retail price (MRP) of any packaged product that it declares an “essential commodity”.
    • The list of items under the Act includes drugs, fertilizers, pulses and edible oils, and petroleum and petroleum products.
    • The Centre can include new commodities as and when the need arises, and takes them off the list once the situation improves.

    How ECA works?

    • If the Centre finds that a certain commodity is in short supply and its price is spiking, it can notify stock-holding limits on it for a specified period.
    • The States act on this notification to specify limits and take steps to ensure that these are adhered to.
    • Anybody trading or dealing in the commodity, be it wholesalers, retailers or even importers are prevented from stockpiling it beyond a certain quantity.
    • A State can, however, choose not to impose any restrictions. But once it does, traders have to immediately sell into the market any stocks held beyond the mandated quantity.
    • This improves supplies and brings down prices. As not all shopkeepers and traders comply, State agencies conduct raids to get everyone to toe the line and the errant are punished.
    • The excess stocks are auctioned or sold through fair price shops.

    Ex: The Union Government has brought masks and hand-sanitisers under the ECA to make sure that these products, key for preventing the spread of Covid-19 infection, are available to people at the right price and in the right quality.

    What about Food Items?

    • The items covered include rice, wheat, atta, gram dal, arhar dal, moong dal, urad dal, masoor, dal, tea, sugar, salt, Vanaspati, groundnut oil, mustard oil, milk, soya oil, palm oil, sunflower oil, gur, potato, onion and tomato.
    • Based on the deliberations, Government takes various measures from time to time to stabilize prices of essential food items which, inter-alia, include appropriately utilizing trade and fiscal policy instruments like import duty.
    • The govt. can impose stock limits and advise State for effective action against hoarders & black marketers etc. to regulate domestic availability and moderate prices.
    • The government utilizes the buffer of agri-horticultural commodities like pulses, onion, etc. built under Price Stabilization Fund (PSF) to help moderate the volatility in prices.

    Back2Basics

    Price Stabilization Fund (PSF)

    • The PSF was set up in 2014-15 under the Department of Agriculture, Cooperation & Famers Welfare (DAC&FW) to help regulate the price volatility of important agri-horticultural commodities like onion, potatoes and pulses were also added subsequently.
    • Procurement of these commodities will be undertaken directly from farmers or farmers’ organizations at farm gate/mandi and made available at a more reasonable price to the consumers.
    • Losses incurred, if any, in the operations will be shared between the Centre and the States.
    • PSF provides for advancing interest-free loans to State Governments/ UTs and Central agencies to support their working capital and other expenses they might incur on procurement and distribution interventions for such commodities.
    • The scheme provides for maintaining a strategic buffer of the commodities for subsequent calibrated release to moderate price volatility and discourages hoarding and unscrupulous speculation.
    • The PSF is managed centrally by a Price Stabilization Fund Management Committee (PSFMC) which will approve all proposals from State Governments and Central Agencies.
    • The PSF is maintained as a Central Corpus Fund by Small Farmers Agribusiness Consortium (SFAC), a society promoted by the Ministry of Agriculture for linking agriculture to private businesses and investments and technology.

    With inputs from: http://www.arthapedia.in/index.php?title=Price_Stabilisation_Fund_(PSF)

  • Growth and the farmer

    Context

    Last month, Montek Singh Ahluwalia’s book, Backstage: The Story Behind India’s High Growth Years, was released. Which tilt in favour of consumer in food policy reduces incentives for farmers, makes it difficult to unlock resources for growth.

    What is covered in the book

    • Besides some very interesting episodes pertaining to author’s personal and professional life, the book is full of useful insights into policy debates and their complexities.
    • At many places, it provides evidence of the impact of these policies.
    • This can be extremely useful as we try to rejuvenate the country’s sluggish economy and abolish poverty.

    Inclusive growth and agriculture

    • Growth in agriculture must for inclusive growth: During the UPA period, from 2004-05 to 2013-14, it was believed that inclusive growth is not feasible unless agriculture grows at about 4 per cent per year while the overall economy grows at about 8 per cent annually.
    • The reason was simple: More than half of the working force at that time was engaged in agriculture and much of their income was derived from agriculture.
      • But many political heavyweights, did not believe that agri-growth could reduce poverty fast enough.
    • Main instrument of agricultural strategy: The main instrument of agricultural strategy was the Rashtriya Krishi Vikas Yojana (RKVY), which gave more leverage to states to allocate resources within agriculture-related schemes.

    What was the impact of strategy?

    • Agri-growth increased: The agricultural strategy, along with other infrastructure investments in rural areas, had a beneficial impact on agri-growth.
      • Agri-growth increased from 2.9 per cent during the Vajpayee period (1998-99 to 2003-04) to 3.1 per cent during the UPA-1 period (2004-05 to 2008-09) and further to 4.3 per cent during UPA-2 (2009-10 to 2013-14).
      • The agri-GDP growth during UPA-2 was driven not as much by RKVY as it was by high agri-prices in the wake of the global economic crisis of 2007-08.
    • Impact on poverty reduction: Agri-GDP growth had a significant impact on poverty reduction, whichever way it was measured — the Lakdawala poverty line or Tendulkar poverty line, which is higher.
      • At what rate poverty reduced? The rate of decline in poverty (headcount ratio), about 0.8 per cent per year during 1993-94 to 2004-05, accelerated to 2.1 per cent per year, and for the first time, the absolute number of the poor declined by a whopping 138 million during 2004-05 to 2013-14.
      • Interestingly, this holds even on the basis of the international poverty line of $1.9 per capita per day (on 2011 purchasing power parity, PPP, also see graphs).

    Right to food and debate around it

    • Scepticism over the success of agriculture support to food subsidy: Instead of celebrating this success of the growth strategy in alleviation of poverty, several NGOs and even Congress stalwarts remained sceptical.
      • They advocated food subsidy under the Right to Food Campaign.
      • National Advisory Council (NAC) came up with a proposal to subsidise 90 per cent of people by giving them rice and wheat at Rs 3/kg and Rs 2/kg.

    What were the arguments put forward by Montek Singh Ahluwalia?

    • Burden on exchequer: He tried to convince them that this was likely to create an unsustainable burden on the exchequer.
    • India could end up importing food: He also argued that India could end up importing grains to the tune of 13-15 million tonnes per year.
    • Cap the population coverage at 40%: He favoured a cap at 40 per cent of the population to be covered under the Food Security Act as the poverty ratio (HCR) in 2011-12 was 22 per cent.
    • Smart card to beneficiaries: He also favoured providing smart cards to the beneficiaries so that they could opt for buying more nutritious food rather than just relying on rice and wheat.
    • Chance for diversification of agriculture: Smart card with beneficiaries would have also allowed diversification of agriculture and augmented farmers’ incomes.
      • But he could not win over the NAC — although the coverage for food subsidy was reduced from the original proposal of 90 per cent to 67 per cent of the population.
    • Against the ban on agri. export: Montek also argued against export bans on agricultural commodities as these impacted farmers’ incomes adversely.
      • Government siding with consumers: But the government of the day often ended up taking the consumer’s side, as that was considered pro-poor.
      • This reduced the incentives for farmers, who then had to be compensated by increasing input subsidies.

    What are the result of this strategy adopted by the government?

    • Negative PSE: No wonder, years later, when we estimated the producer support estimates (PSEs), as per the OECD methodology — used by countries that produce more than 70 per cent of the global agri-output — we found a deeply negative PSE.
      • What negative PSE indicates? This indicates implicit taxation of agriculture through trade and marketing policies, even when one has accounted for large input subsidies going to farmers (see graph on PSE).
    • Consumer bias in the system: Today, the food subsidy is the biggest item in the Union budget’s agri-food space. In the current budget, it is provisioned at Rs 1,15,570 crore.
      • Borrowing by FCI not factored in: But this factor hides more than it reveals. Lately, the government has been asking the Food Corporation of India (FCI) to borrow from myriad sources, and not fully funding the food subsidy, which should logically be a budgetary item.
      • The outstanding dues of the FCI are more than the provisioned subsidy, and if one adds these dues to the budgeted food subsidy, the effective amount of food subsidy comes to Rs 3,57,688 crore.
      • This displays the consumer bias in the system.

    Conclusion

    • Restrict the population coverage of food subsidy: The Economic Survey of 2019-20 makes a case for restricting food subsidy to 20 per cent of the population — the headcount poverty in 2015 as per the World Bank’s $1.9/per capita per day (PPP) definition was only 13.4 per cent.
      • For the others, the issue prices of rice and wheat need to be linked to at least 50 per cent of the procurement price or, even better, 50 per cent of the FCI’s economic cost.
    • Unless we make progress on this front, it is difficult to unlock resources for the growth of agriculture, which slumped from 4.3 per cent during UPA-2 to 3.1 per cent during Modi 1.0.

  • Is the worst really over for the country’s agricultural sector?

    Context

    Estimates of gross domestic product (GDP) released on 28 February confirmed that India’s economy is decelerating. The silver lining was growth in agriculture, which accelerated for the third quarter in a row to 3.5%.

    How agriculture sector has performed in the last few years?

    • Robust growth in the last 5 years: A look at the national accounts for a longer period shows robust agricultural growth during the first five years.
      • With agriculture growing at 3.17% per annum between 2013-14 and 2019-20.
      • This is remarkable, given that the broader economy is witnessing a slowdown.
    • Rural economy seen from the other indicators: A variety of other indicators show that the rural economy has been going through possibly its worst phase, with declining wage growth and farmer incomes causing serious distress.

    Crop sector growth rate at lowest

    • A clue to this disconnect between the national accounts and other indicators lies in a breakdown of the national accounts.
    • Crop sector growing at lowest in two decades: The GDP data for the agricultural sector shows that the crop sector, which accounts for 56% of total agricultural output and employs a majority of the farmers, has been growing at only 0.3%, the lowest in two decades.
      • By comparison, the sector grew 3.3% per annum during the 10 years under United Progressive Alliance governments.
    • Which sector of agri. is growing at a high rate? The agricultural sub-sectors that showed high growth between 2013-14 and 2018-19 were livestock (8.1%), forestry (3.1%) and fisheries (10.9%).
      • It is a puzzle what drove the high growth of livestock at a time when the crop sector was experiencing negligible growth.
      • The trend defies the logic: This defies past trends and is also difficult to believe, given contrasting trends in other indicators of livestock
    • The declining income of farmers and a decline in wages: The poor performance of the crop sector confirms the declining income of farmers, the majority of whom depend on crops for subsistence. Not surprisingly, even real rural wages are declining.
    • Inflationary pressure and hopes of growth in income of farmers: Hopes were kindled in the last three months as agricultural commodities showed signs of inflationary pressures, with food inflation hitting double-digit rates.
      • Increase in rural demand not the cause of inflation: A careful analysis of the data rules out rising rural demand as the cause of that inflationary trend.
      • Many price pressures were due to the mismanagement of cereal supplies by the government and supply shocks in vegetables.
      • In such circumstances, farmer income could not have risen. Some of this was also a result of food prices rising internationally.

    Trend pointing to the fall in agri. prices

    • Softening of food prices: Recent trends in international markets suggest a softening of food prices led by an overproduction of cereals and easing edible oil inflation. Following 3 factors may contribute to its fall.
    • Impact of fall in crude oil price: This trend will gain strength in the wake of the recent slide in crude oil prices.
      • With the global economy displaying signs of a slowdown, prices of agricultural commodities are likely to fall sharply.
      • Relation of food prices with oil prices: They tend to follow movements in crude oil prices, as was seen during the latter’s collapse in August 2014. In all likelihood, a similar decline in agricultural prices is upon us.
    • Food-grain stock with FCI: A second factor that may exacerbate the income troubles in agriculture is the presence of massive food-grain stocks with the Food Corporation of India.
      • This may slow the procurement of farm produce and lower price realizations, particularly cereals but also other crops.
    • The coronavirus outbreak: Lastly, the global slowdown due to the coronavirus outbreak is likely to dampen demand in the economy, and in turn hurt the agricultural sector.

    Conclusion

    • Limited room to improve the situation: These factors are likely to worsen agricultural incomes, and domestic policy has limited room to manoeuvre.
    • Opportunity to revive the demand: This situation is also an opportune time to revive rural demand The government could pass on some of the windfalls from the drop in oil prices to rural consumers. This could help lift rural incomes.
      • The government could also increase spending in rural areas to help boost demand and prevent a collapse in agricultural prices.
    • Worst for agriculture is not yet over: Whether the government uses the opportunity or fritters it away again will be known in the coming months. What appears certain for now, though, is that the worst of the rural slowdown is far from over.

  • Market Intelligence and Early Warning System (MIEWS)

     

     

    The Union Food Processing Ministry has launched a new Market Intelligence and Early Warning System (MIEWS) portal to monitor the prices of TOP crops – Tomato, Onion and Potato.

    About MIEWS

    • MIEWS portal is the first-of-its-kind platform for ‘real-time monitoring’ of prices of tomato, onion and potato.
    • The system has been designed to provide advisories to farmers to avoid cyclical production and issue early warnings in situations of gluts.
    • It will simultaneously generate alerts for price intervention under the terms of Operation Greens (OG) scheme.
    • It will generate early alerts in case there is going to be a major change in the prices of these crops.
    • This will help in planning and timely intervention for price stabilization. The portal can be accessed at this link- http://miews.nafed-india.com.

    Utility of MIEWS

    The MIEWS would:

    • Monitor the supply situation for timely market intervention,
    • Assist in rapid response during times of glut to move the produce from glut regions to regions with deficit supply.
    • Provide inputs for export/import decision making.

    Back2Basics

    Operation Greens

    • In the budget speech of Union Budget 2018-19, a new Scheme “Operation Greens” was announced on the line of “Operation Flood” to promote Farmer Producers Organizations (FPOs #), agri-logistics, processing facilities and professional management.
    • Accordingly, the Ministry has formulated a scheme for integrated development of Tomato, Onion and Potato (TOP) value chain.
    • Under the OG Scheme, during a glut situation, the evacuation of surplus production from producing areas to consumption centres will be undertaken in the following cases:
    1. When the price falls below the average market price at the time of harvest in the preceding 3 years.
    2. When the price falls more than 50 percent in comparison to the previous year’s market price at the time of harvest.
    3. When the price falls below the benchmark, if any, fixed by either the state or central government for a stipulated period.

    For additional readings, navigate to:

    https://mofpi.nic.in/Schemes/operation-greens

  • Tilhan Mission

    The government will launch Tilhan Mission to make the country self-reliant in oilseed production.

    Why such mission?

    • India is the fourth largest vegetable oil economy in the world after the USA, China and Brazil.
    • Today, the oilseeds account for 13% of the cropped area in the country.
    • Still, India is the largest importer of palm oil in the world.

    Oilseed production in India

    • Total Oilseeds production in the country during 2019-20 is estimated at 34.19 million tonnes which is higher by 2.67 million tonnes than the production of 31.52 million tonnes during 2018-19.
    • Further, the production of oilseeds during 2019-20 is higher by 4.54 million tonnes than the average oilseeds production.

  • Changes in Crop Insurance Scheme

    The Centre has decided to restrict its premium subsidy in its flagship crop insurance schemes to 30% for unirrigated areas and 25% for irrigated areas (from the existing unlimited), and to make enrolment of farmers in the Pradhan Mantri Fasal Bima Yojana (PMFBY) and Restructured Weather Based Crop Insurance Scheme (RWBCIS) voluntary from the 2020 Kharif season.

     Other changes in crop insurance schemes

    • The government has given flexibility to states/UTs to implement PMFBY and RWBCIS, and given them the option to select any number of additional risk covers/features like prevented sowing, localised calamity, mid-season adversity, and post-harvest losses.
    • Earlier, these risk covers were mandatory.

    Why such a move?

    By capping the subsidy for premium rates up to 30%, the Centre wants to dis-incentivize certain crops in such areas where growing these crops involve high risks in terms of crop insurance premiums.

    What were the schemes?

    • At present, under PMFBY and RWBCIS, farmers pay a premium of 2% of the sum insured for all foodgrains and oilseeds crops of Kharif; 1.5% for all foodgrains and oilseeds crops of Rabi; and 5% for all horticultural crops.
    • The difference between actual premium rate and the rate of insurance premium payable by farmers, which is called the Rate of Normal Premium Subsidy, is shared equally between the Centre and the states.
    • However, states and UTs are free to extend additional subsidy over and above the normal subsidy from their budgets.
    • Until now, there was no upper limit for the central subsidy.
    • The Cabinet decided to cap the Centre’s premium subsidy under these schemes for premium rates up to 30% for unirrigated areas/crops and 25% for irrigated areas/crops.

    How many farmers are covered under these two schemes?

    • During 2018-19, about 5.64 crore farmers are enrolled with PMFBY for an insured sum of Rs 2,35,277 crore, and 30% of the gross cropped is insured.
    • When the government approved PMFBY four years ago, it was described as a path-breaking scheme for farmers’ welfare” under which there was no upper limit on government subsidy.
    • Even if balance premium was 90%, it was to be borne by the Government
    • While PMFBY is based on yield, RWBCIS is based on proxies and farmers are provided insurance protection against adverse weather conditions such as excess rainfall, wind and temperature.
    • The number of insured farmers under RWBCIS is relatively low.

    Impact of the move

    This change will have two main implications.

    • First, it may bring down the rates of overall premium as the state governments now will not be required to invite bids factoring these risks.
    • Second, it will make these schemes less attractive for farmers.
    • However, states/UTs can offer specific single peril risk/insurance covers like hailstorm etc under PMFBY.

    Burden of premium

    • One interpretation of this decision is that the burden of premium subsidy will go up for the states.
    • Example: In the old regime, if a farmer’s Kharif crop was insured for Rs 1,00,000 and the rate of actuarial premium was 40%, then the premium paid by the farmer was 2% (Rs 2,000), and the remaining premium was shared by the Centre and the state equally (19% or Rs 19,000).
    • In the new regime, for the same sum insured (Rs 1,00,000) and the same rate of premium (40%), the Centre will give subsidy for premium rates up to 30%.
    • This means that from the Kharif 2020 season , the Centre will have to pay premium at the rate of 14% (out of 30%, the farmer’s share is 2%, and the Centre’s and state’s 14% each).
    • The state has to bear the entire burden of the premium subsidy in cases where the rate of premium goes beyond the threshold of 30%.

    No insurance of certain crops

    • Another interpretation is that the Centre may stop supporting insurance of certain crops in certain areas where the rate of premium is more than 30%.
    • The Department of Agriculture, Cooperation and Farmers Welfare in consultation with other stakeholders/agencies will have to prepare State specific, alternative risk mitigation programme for crops/areas having high rate of premium.
    • While the average premium rate under PMFBY and RWBCIS at the national level was 12.32% for 2018-19, for some crops in certain districts, the rate of premium has been higher than 30% in recent years.
    • For instance, the rate of premium for Kharif groundnut has reached 49% in Rajkot of Gujarat, and the rate for Rabi paddy crop Ramnathapuram (Tamil Nadu) has reached 42%.

    Impact on states

    • The states are already defaulting on their share, and the Centre’s new cap will put an additional financial burden on them.
    • Madhya Pradesh has not paid its share of premium even for Kharif 2018, which comes to Rs 1,500 crore. As a result, farmers have not got their claims.
    • In fact, most states have delayed the payment of their share of premium.
    • Sources said that in some states, the expenditure on premium of PMFBY is more than 50% of their budget for agriculture.

    Immediate implications

    • That move will lead to a rise in the rates of premium, as the area covered under insurance and the number of enrolled farmers is expected to come down significantly.
    • As of now the schemes are compulsory for all loanee farmers and optional for other farmers.
    • Non-loanee farmers under the crop insurance schemes are much fewer than loanee farmers.
    • If the latter opt out of the schemes, the number of insured farmers will drastically come down.
    • In such a scenario the rate of premium of certain crops in some areas may go beyond 30%.

    Back2Basics

    Pradhan Mantri Fasal Bima Yojana – Min Premium, Max Insurance

  • Buddah Nullah

    The Punjab govt. has approved â‚č650 crore in the first phase for rejuvenation of the highly polluting Buddah Nullah — a seasonal tributary of Sutlej in Ludhiana.

    Buddah Nullah

    • Buddah Nullah or Budha Nala is a seasonal water stream that runs through the Malwa region of Punjab.
    • It passes through highly populated Ludhiana and drains into Sutlej River, a tributary of the Indus river.
    • It has also become a major source of pollution in the region as well the main Sutlej river, as it gets polluted after entering the highly populated and industrialized Ludhiana city, turning it into an open drain.
    • Also, since a large area in south-western Punjab solely depend on the canal water for irrigation, and water from Buddha Nullah enters various canals after Harike waterworks.

    Why such move?

    • The pollution in the Buddah Nullah is a major threat to public health and environment and the main sources of pollution in the nullah are direct flow of pollutants by industries and dairies.
    • Also, treated effluents from existing STPs, based on UASB technology, does not meet the required quality and overflow from sewer lines add to the problem.
    • The NGT has already directed the government to take proactive steps to immediately address the problem.

  • [pib] Scheme for formation and promotion of Farmer Producer Organizations (FPOs)

    The Cabinet Committee has given its approval for 10,000 FPOs to be formed in five years period from 2019-20 to 2023-24 to ensure economies of scale for farmers.

    What are Farmer Producer Organizations?

    • A Producer Organisation (PO) is a legal entity formed by primary producers, viz. farmers, milk producers, fishermen, weavers, rural artisans, craftsmen.
    • A PO can be a producer company, a cooperative society or any other legal form which provides for sharing of profits/benefits among the members.
    • In some forms like producer companies, institutions of primary producers can also become member of PO.
    • FPO is one type of PO where the members are farmers. Small Farmers’ Agribusiness Consortium (SFAC) is providing support forthe promotion of FPOs.

    About the Scheme

    • It would be a new Central Sector Scheme titled “Formation and Promotion of Farmer Produce Organizations (FPOs)” to form and promote 10,000 new FPOs.
    • Initially there will be three implementing Agencies to form and promote FPOs, namely Small Farmers Agri-business Consortium (SFAC), National Cooperative Development Corporation (NCDC) and National Bank for Agriculture and Rural Development (NABARD).
    • States may also, if so desire, nominate their Implementing Agency in consultation with DAC&FW.
    • DAC&FW will allocate Cluster/States to Implementing Agencies which in turn will form the Cluster-Based Business Organization in the States.

    Modes for promotion

    • FPOs will be promoted under “One District One Product” cluster to promote specialization and better processing, marketing, branding & export by FPOs.
    • There will be a provision of Equity Grant for strengthening equity base of FPOs.
    • There will be a Credit Guarantee Fund of up to Rs. 1,000.00 crore in NABARD.

    Benefits

    • Small and marginal farmers do not have the economic strength to apply production technology, services and marketing including value addition.
    • Through the formation of FPOs, farmers will have better collective strength for better access to quality input, technology, credit and better marketing access through economies of scale for better realization of income.