PSS Procurement
Introduction to PSS:
PRICE SUPPORT SYSTEM IN MAHARASTRA
The Government of India announces Minimum Support Prices (MSP) for various notified Oilseeds and Pulses every Crop season under its Price Support Scheme (PSS) of PM AASHA (hereinafter referred to as PSS) for the purpose of protecting the interests of the farmers. In case, the prevailing prices of a notified agricultural commodity fall below the MSP announced by the Government of India, the agricultural commodity would be procured at its MSP under the Price Support Scheme from farmer.
The Department of Agriculture, Cooperation & Farmers Welfare, Government of India, has notified Nafed as one of the central nodal agencies of Government of India for procurement of Oilseeds, Pulses at MSP under Price Support Scheme vide its notification dated 30-10-2019.
PSS and Maharashtra State
Further the State Government of Maharashtra vide its notification / letter dated 06-03-2019 has nominated/appointed MAHA FPC as the State Agency / State Level Supporter for implementing the PSS Scheme strictly as per the PSS guidelines of Government of India. Currently MAHA FPC operates in Vidarbha and Marathwada Regions.
The procurement under the Scheme is planned to be made strictly in accordance with the PSS guidelines or as per directions of DAC & FW, issued from time to time.
The Cabinet Committee on Economic Affairs (CCEA) dated on 08.09.2021 approved the increase in the Minimum Support Prices (MSP) for all mandated.
As per guidelines, duration of PSS procurement operations was for 90 days. However, GoI & GoM has given extension for 18 days.
MSWC Warehousing Centers
Existing Status of Procurement
Accordingly, Government of India organized MSP Procurement operation of Chana Commodity under Umbrella Scheme of PM-AASHA in the state of Maharashtra through NAFED and FCI.
So far procurement was predominantly done by MARKFED and VCMF which was monitored at state, district and block level. Sale, purchase and procurement also happened at district level only. Many small and marginal farmers who were unable to travel far were left behind. There was a need to have outreach to village level and engage with farmers at the farmgate level at their door steps. This required decentralization of the procurement centers and this is where MAHA FPC came into picture. Besides, Government of Maharashtra notified MAHAFPC as State Level Agency to carry out procurement operations.
There was a need to have outreach to village level and engage with farmers at the farmgate level at their door steps. This required decentralization of the procurement centers and this is where MAHA FPC came into picture. Besides, Government of Maharashtra notified MAHAFPC as State Level Agency to carry out procurement operations.
Role of MAHAFPC
The MAHAFPC has been involved in the procurement of pulses under the price support scheme (PSS)/price stabilization fund (PSF) involving its member FPCs. The consortium ensures the documents verification of the farmers which prove his genuineness.
MAHA FPC also take prime role in making adequate publicity of PSS Operations – SP for the Crops name, address of Procurement Centres, Procurement Period, documents required, contact details of authorized person Clusters FPOs and the cost of the same shall be borne by the state government. MAHA FPC is also responsible to ensure that payments to the farmers are given within three days from the receipt of their produce.
MAHA FPC played a role in over 20 districts in Marathwada and Vidarbha region in the gram procurement.
Coverage and Number of Procurement Centres in Districts
In accordance with the PSS guidelines, State Govt. of Maharashtra has issued notification No. SPS-2022/PRA.KRA.21/24 S dated 15-02-2022 notifying the expected production, sowing area, average yield, peak arrival/harvesting season for all the crops for which MSP is declared and that the State Government of Maharashtra is willing to implement the Price Support Scheme strictly as per the PSS guidelines of Govt of India. The State Government undertakes to utilize the PSS procured stocks in the State Schemes etc.
Specifically, MAHA FPC plays the following roles with respect to procurements:
- Appointment of primary agencies and signing of MOU: After notification of the Government of Maharashtra, MAHAFPC appointed member organizations as their primary agencies for purchasing notified commodity of Gram directly from the Farmers at the farm gate level by entering an MOU with clear provisions of procurement modalities and corrective measures for disputes if any.
- Activities for PSS awareness/ publicity: MAHAFPC has taken efforts for the adequate publicity of the MSP scheme through launching “MSP at your Doorstep” campaign through farmer producer company. Under this campaign procurement centers made awareness about the MSP for the crops name and address of procurement centers, procurement period, documents required, contact details of authorized person of central / state / primary procuring agencies on the cost of State Government.
- Working capital arrangement: MAHAFPC has sent a proposal to the Government of Maharashtra as well as NABARD/commercial banks for availing the working capital arrangement. However, as working capital was not availed by the above agencies; FPCs raised the funds from members/ other sources for liquidity of the supply chain operations.
- Payment to the farmers: MAHAFPC was responsible to make the payments to the farmers within three days from the receipt of their produce. However, as there was no working capital availed hence farmers payments were processed only after payment received from the NAFED/FCI only after submission of Clean WHR and raising necessary claims of MSP value. It took minimum 15-20 days to release farmers payment.
- Custody/hypothecation of stocks: Farmer Producer companies procured stock at the farm gate level and then stock was shifted to the accredited warehouses of MSWC/CWC. Deposited stocks were transferred in the name of central agencies and Clean WHR were submitted to central agencies on weekly basis so as to get the funds from central agency.
- Verification of documents/quality of stock: MAHAFPC has made Farmer producer companies responsible to verify the documents of the farmers which prove his genuineness. Further, they shall also be responsible to purchase the stock from farmers strictly as per the FAQ norms, as notified by Central Government from time to time. If at any stage, it is found that there is any deviation from FAQ norms, loss shall be borne by the concerned agencies.
Analysis of district production/procurement/MAHA FPC’s share
Latur, Nanded, Buldhana, Amravati are larger districts in terms of total pulse (Bengal Gram/Chana) production. But the extent of procurement varies by districts. For instance, Buldhana has higher MSP procurement (54%) as a proportion of the total production compared to Latur that stands at 28% of the total production.
Of the total quantity procured, MAHA FPC has major share in the districts of Latur, Nanded, Hingoli, and Bhandara. MAHA FPC has great opportunity to increase its procurement share in many districts, for instance – Buldhana, Amravati, Yavatmal, Akola.
As per govt. guideline, the maximum procurement limit is set to be 25%. However, there has been special cases where procurement was done in excess of 25% in certain districts.
Many of the districts where procurement itself is low (Nagpur, Solapur, Aurangabad, Nanded), there is a need to increase awareness about MSP. MAHA FPC can increase their awareness/publicity activities and increase their leadership in these areas and procurement share.
The PSS Procurement Ecosystem in Maharashtra
PSS procurement system in Maharashtra has multiple stakeholders in the state that work together to make procurement process smooth. Interaction involves information flow, commodity flow and payment flow.
Before each season’s harvest, it is important to estimates the acreage and quantity that are likely to be made available in the region. Such activities are done collaboratively by Govt agencies (NAFED, FCI), FPCs and local state/ district administration. Currently, in Maharashtra, the federation of FPOs are gaining popularity as a reliable channel for procurement. MAHA FPC is one of the most prominent such federation of FPC in the region. Recognizing the pivotal role of MAAHFPC at the backend linkages, NAFED has strategic focus to strengthen market linkages & Agri Infrastructure of value chain.
Farmer Producer Companies are the second set of stakeholders that plays a big role in the procurement at grassroot level. MAHA FPC plays an instrumental role in bringing FPCs together (more than 650) and empowering them with relevant information, resources and infrastructure for an efficient procurement operation. They act as procurement center and also do quality checks.
As per government direction, procurement happens through the digitized NEML portal. E-Samriddhi is another important digital stakeholder that does farmers registration and procurement scheduling at the farmer level. Currently this is facilitated by the FPCs on behalf of the farmers.
FPC owned procurement centers and state owned/hired warehouses are another set of key dependencies that is key for accepting farmers’ produce and issue the crucial warehouse receipts (WHR) that is needed for payment processing.