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Price Support Scheme (PSS)

The Government’s price policy for agricultural commodities strives to ensure profitable prices to the growers with a vision of encouraging higher investment and production. This leads to safeguarding the consumer interest by making available supplies at reasonable prices with low cost of intermediation. Moreover, the price policy aims at changing a balance and integrated price structure with respect to the overall needs of the economy. Let us take a look at the Price Support Scheme, an initiative taken by the Government to ensure a productive environment for farmers.

Need for PSS Guidelines

Price Support Scheme (PSS) has been in existence for more than three decades. However, there are no guidelines to regulate PSS operation. Its implementation has shown the requirement of formulating comprehensive guidelines for effective implementation of the project to make sure farmers are benefited and to establish a system for efficient marketing, development of non-traditional/new markets, processing of agricultural produce for value addition and sales through a network of retail points.

Mode of Purchase

All stocks would be purchased by Cooperative Societies, Farmers’ Producer’s Organization (FPO), Farmers’ Producers’ Companies, Panchayat Raj Institutions directly from farmers to avoid malpractices of mediators. Purchase centres are located close to CWC/SWC godown and processing mill to bring down transportation cost. The purchases are made via an online mechanism, and central/state procuring agencies display the details of purchases regularly on their website. Only fifty bags of produce can be purchased from one farmer in a day.

Area of Operation

Purchases are made from farmers who come into the field of operation of the allocated purchase centres.

Display of Information

The procurement centre displays MSP, bonus, operating hours and days, the period of procurement, mode and time of payment to farmers.

Payment to Farmers

All payments are made to farmers via ECs and cheques, within three days from actual delivery to the procuring agency. Moreover, only one payment is permitted for a day. The procuring agencies must confirm that the payments have been made directly into the bank account of the farmers using the details of account and the name of the account payee-cheque and paying it by using NEFT/RTGS facilities.

The account details of one farmer should not be used by other farmers.

Quantity for Procurement

The overall procurement quality should not exceed 25% of the actual production of the commodity of that year/session. Prior approval of DAC is required for procurement limits of above 25%.

Visits and Inspections

All agencies are responsible to closely monitor the scheme’s operations and ensure strict compliance of the provisions and conditions of the scheme and its guidelines.

Procurement Report

All agencies are liable to furnish the daily progress reports of procurement and the disposal of products to their higher officials through SMS, email, fax, etc.

Storage of Procured Stock

The procuring agencies have to store the procured stock only in CWC/SWC godowns. If there are no godowns/space available, the stock may be stored in other godowns approved by the State Government/Central Procurement Agency. Utmost care has to be given to ensure that stocks are stored safely and scientifically to prevent any loss.

Limitation on Holding Stock

All procured materials are stored based on its biological life, which means that the materials should not be stored more than six months from the closure of PSS operation, to prevent increasing holding cost and quality deterioration. Whilst holding stocks, the seasonability/durability of crops has to be taken into consideration. However, for exceptional cases, prior approval from DAC has to be obtained. It is the responsibility of the company’s warehouse to make sure that the goods are correctly stored. The procurement agency has to submit a storage ageing report every quarter to the Department of Agriculture and Cooperation. The Government of India mentions the ageing of the stored material in every quarter. Any content that is stored for more than six months has to be disposed.

Disposal of Stock

The stocks would be disposed of through competitive bidding like e-auctions, open auction, using online platform of commodity exchanges/online spot markets/online spot market platforms, future trading etc. In addition to this, the traditional disposal mechanism has to discourage better realization and greater transparency. The stock position, centre, quantity, value, variety, disposal statement, and the ruling price has to be updated on the website by the concerned agencies.

Maintenance of Documents/Agencies

The procuring agencies are responsible for maintaining all relevant records like samples drawn, checking FAQ parameters like the moisture content, quantity and value of produce with the name and address of farmers, payment made to farmers, produce rejected, expenditure incurred, ruling market price of the commodity etc.

Finalization of Accounts/Sharing of Loss Audit

The audited accounts have to reach DAC within three months from the disposal of stock. The State agencies submit their accounts to the central agencies within one month from the last date of procurement. The DAC examines the accounts, accepts either in full or in part and sends to the Department of Expenditure, through IFD, DAC for final acceptance of accounts. The computation of loss shall be the total cost of procured cost minus realization on the sale of stock. Besides, if there is any profit in the PSS operation, the same is remitted to the Government of India. All documents should be made available in the public domain and easily accessible to the general public.

Service Charges

Service charges for copra, at 2.5% and 1.5% for other commodities is paid on Minimum Support Price (MSP) to the central agencies. Moreover, a maximum of 2% service charge would be paid to the procuring agencies at the state/procurement level. The procurement by State Level Marketing Federation is made through Primary Cooperative Societies where service charges at the rate of1% is paid to Primary Societies. On the other hand, if there are no Primary Societies functional in a particular area as certified by the State Government, the State Agencies/Federation would be paid 2% service charge provided they open and manage the procurement centres according to the guidelines. In addition to this, the DAC also offers 1% incentive to the central agencies on the net profit earned for disposal of PSS stocks.

Arrival of Stocks

All farmers are advised to bring their stocks to the nearest located procurement centre. The land records indicate the commodity that is offered under PSS from his own/leased land.

Short Recovery

Central/State agencies recover the value for any short recovery according to the agreement. Besides, the conventional stage norms like Moisture Adjusted Weight (MAW) for the procured stock has to be accounted for the procurement agency.

Genuineness of Farmers

Before undertaking purchases of a commodity under PSS, the Central Agencies contact the concerned State authorities to decide the documents, ensuring the authenticity of the farmer and the landholding. It has to be ensured that there is no overwriting, cutting, erasing etc. in any documents that represent genuineness of the farmers and his landholding in the form of girdawari or any other document of the State Government. However, the procuring agencies may retain copies of these documents.

Average Yield

When undertaking purchases of any commodity under PSS, the Central Agencies may receive estimations of average yield and production in the area that is covered by the procurement centres from the respective State/UT Government authorities to ensure the procurement of produce from the farmers. If the variation of an area of more or less than 20%, specific reasons would be recorded for higher purchase.