Karnataka begins Price Deficiency Payment system for onion

Karnataka begins Price Deficiency Payment system for onion

Under this, farmers will be compensated for difference between market rate and MSP, up to ₹200 a quintal

Karnataka has taken a new step in market intervention to bail out farmers during price crash by commencing Price Deficiency Payment system for onion, whose price has plummeted.

Under this system, farmers get monetary compensation during crash in price of their produce, which is equivalent to the difference between market price and the government-announced minimum support price, through direct transfer to bank accounts.

Presently, such a system is in practice only in Madhya Pradesh and Haryana. While Madhya Pradesh has introduced it only for foodgrains and oil seeds, Haryana has taken it up on an experimental basis for perishables.

Going by the volumes, Karnataka is the first State implementing the new system in a full-fledged manner for perishable commodity like onion, said Karnataka Agricultural Price Commission chairman T.N. Prakash Kammaradi. As per the KAPC’s recommendations, the Karnataka government issued a notification on November 27 announcing the scheme for onion in the markets of Gadag, Bagalkot, Dharwad, and Belagavi districts from November 28 to December 12. Under the new system, the government has fixed the support price level for onion at ₹700 a quintal and the Price Deficiency Payment level at ₹200. This means that farmers get cash benefit of ₹200 if the onion price rules around ₹500 in the market. As the maximum benefit level is fixed at ₹200. The scheme is expected to cost ₹50 crore to ₹75 crore, which would be used from a revolving fund.

The Price Deficiency Payment system is being implemented with 16 conditions that include getting verification regarding crop details from a committee of top officers at the entrance of the APMC, selling only to registered traders, verification of the quantum of produce by officials of weights and measurements, keeping track of onion-laden vehicles that go out of the APMC yards, and noting down their destinations, etc.

According to Dr. Kammaradi, the new system is one of the options for quick response during price crash. “It will take a minimum of one month under the conventional market intervention scheme of direct procurement by government as various clearances will have to be obtained. But it is possible to begin the scheme within a day under the Price Deficiency Payment method because the State has already introduced a digitalised system of collecting real-time data of arrivals and prices in markets,” he said.

Also, under the conventional direct procurement scheme, disposing the procured crop is an issue as it has to be stored till there is a demand for it in the market.

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