India: Govt may make FCI nodal agency for pulses buys too

The government is likely to entrust Food Corp of India with price support and buffer stock management operations for pulses, a food ministry official told Informist.

The government plans to merge the price support scheme and price stabilisation fund for pulses so that these can be implemented by a single ministry and agency. A committee was set up under the chairmanship of NITI Aayog member Ramesh Chand to study the feasibility of such a merger, and suggest modalities to implement the combined scheme.

“The committee held its meeting in the presence of Ramesh Chand and secretaries of food, agriculture and consumer affairs departments on Oct 27,” the official said. “The committee discussed the merits and rationale of undertaking price support scheme operations and price stabilisation functions by different departments and organisations of the government.

“On Jan 4, Ramesh Chand submitted a report on behalf of the committee to the group of secretaries, and the next meeting is scheduled on Tuesday to discuss the matter further,” the official said.

The price support scheme provides remunerative prices to farmers through procurement under the National Agricultural Cooperative Marketing Federation of India Ltd. The produce procured is then passed on to the Department of Consumer Affairs to stabilise prices. As such, two departments are involved – the Department of Agriculture and Farmers Welfare and the Department of Consumer Affairs.

The committee suggested that pulses could also be procured through FCI by the Department of Food and Public Distribution, while the procurement of non-food grains crops like oilseeds and copra could be continued through NAFED by the Ministry of Agriculture and Farmers Welfare.

FCI, the notified agency to procure food grains for the government and maintain buffer stocks, also has the necessary infrastructure and dispensation to arrange for the disposal of the stocks procured.

“Procurement of pulses being presently made under price support scheme by the agriculture ministry through central nodal agencies can be easily undertaken by the Department of Consumer Affairs, through FCI,” the committee said in its report.

“This will also bring both the procurement for minimum support price for farmers and distribution of pulses for price stabilisation under one ministry, which is the food, public distribution and consumer affairs ministry.”

Currently, the price support scheme is notified for pulses, oilseeds and copra, and being implemented through central nodal agencies such as NAFED, National Cooperative Consumers’ Federation of India Ltd, FCI, and Small Farmers Agribusiness Consortium by the Department of Agriculture and Farmers Welfare.

The scheme is aimed at providing remunerative prices to farmers by procuring up to 25% of a state’s production when the market price falls below the notified minimum support price during peak arrivals and harvesting. Any procurement above 25% is carried out at the state government’s cost.

For 2022-23, the Cabinet Committee on Economic Affairs has approved enhancing this limit to 40% of a state’s production for three pulses – tur, urad and masur.

The committee also said that the role of NAFED, the procuring agency for 95% of price support scheme stock, has to be revised.

“NAFED is paid 1.5% of minimum support price value as a service charge, and it is provided bank guarantee for an amount of 390 bln rupees, while an amount of 15 bln rupees loan guarantee is given to FCI, though the latter does not procure any pulses under price stabilisation fund presently,” according to the report.

As things stand, the lion’s share of pulses is procured by NAFED, followed by National Cooperative Consumers’ Federation. Apart from these, FCI and Small Farmers’ Agribusiness Consortium also procure pulses, but in a small quantity.

FCI undertakes procurement of wheat and paddy in large quantities under the price support scheme. It also buys a small quantity of pulses. In the 2022-23 (Apr-Mar) rabi marketing season, FCI had procured only 73,650 tn of chana.

FCI is mandated to procure foodgrains and effective manage foodgrains in the country.

“However, the FCI restricted itself to the procurement of cereals only and not pulses, which also falls under the ambit of foodgrains,” the committee said in its report.

Tags: FCI, NAFED, price, stocks, pulses, support, Food Corp of India