Centre to unveil PM­ Kisan Bhai to end traders’ monopoly

  • November 12, 2023
  • Posted by: OptimizeIAS Team
  • Category: DPN Topics
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Centre to unveil PM­ Kisan Bhai to end traders’ monopoly

Subject: Schemes

Section: Agriculture

Context:

  • To help small and marginal farmers, who do not have the capacity to hold their produce in warehouses and wait for better prices, the Centre plans to incentivise them under a scheme likely to be named PM Kisan Bhai (Bhandaran Incentive) scheme.
  • The Agriculture Ministry’s 10 day deadline to receive feedback ended on Friday after a concept paper was published, and the scheme is likely to be rolled out by December end.

Objective Of Scheme:

  • Kisan Bhai is expected to empower farmers, allowing them to retain their crops for a minimum of three months post harvest.

More about Scheme:

  • This is seen as an attempt to break the monopoly of traders in deciding prices of crops.
  • This initiative grants farmers the autonomy to decide when to sell, in contrast to the current practice where most crops are sold around harvest, typically spanning 23 months.
  • The government hopes that by providing monetary support for storage and promoting e-NWR trade through the online platform e-NAM, farmers will have more control over prices and access to a larger number of buyers.
  • According to the concept paper, though the pledge finance facility is available to farmers now, its outreach is constrained by the high carryover cost on the farmers and credit risk to the bankers.

Implementation of Scheme:

  • In the first phase, the scheme may be piloted in Andhra Pradesh, Assam, Madhya Pradesh, Maharashtra, Rajasthan, Tamil Nadu and Uttar Pradesh with an estimated expenditure of ₹170 crore in three years including current fiscal.

Major Components Of Scheme:

  • There are two components of the proposal — Warehousing Rental Subsidy (WRS) and Prompt Repayment Incentive (PRI). Small and marginal farmers as well as farmer producer organisations (FPOs) will be eligible for the WRS benefit at ₹4 per quintal per month irrespective of rate of warehousing (storage) rental charges and also whether charged per quintal basis or area basis by warehouse operator.
  • But the government has proposed that the storage incentive will be provided for a maximum of three months. Besides, produce stored for 15 days or less will not be eligible for the subsidy. The incentive will be calculated on day to day basis.
  • After wheat harvesting is completed in MayJune, supplies are regulated from July onwards by traders until the next crop arrives. The government, by limiting the incentive for three months, will transfer the power to stockists from October, when festival season starts, as farmers will be forced to liquidate by before October.

About e-NWR:

  • The negotiable warehouse receipt (NWR) system was launched in 2011 allowing the transfer of ownership of a commodity stored in a warehouse without having to deliver it physically.
  • These receipts are issued in negotiable form, making them eligible as collateral.
  • This has been enabled by enabling the financing of warehouse receipts through the Warehouse (Development and Regulation) Act, 2007.
  • The Warehousing Development and Regulatory Authority (WDRA) regulates the entire operation under NWR.

Salient features of e-NWR:

  • An e-NWR is available only in electronic form.
  • The single source of information for the e-NWR is the repository system where e-NWR is issued by registered warehouses.
  • Confidentiality, integrity and availability of the e-NWR information is provided by the Repository system.
  • An e-NWR has time validity.
  • All e-NWRS can be traded through off-market or on-market in Commodity Exchanges platforms. 
  • An e-NWR can be auctioned under certain conditions such as loan not repaid, on expiry and delivery not taken, and on likely damage or spoilage of the commodity in the warehouse.
  • e-NWR can be transferred fully or in part.

Benefits:

  • Electronic-Negotiable Warehouse Receipt (e-NWR) will help farmers/FPOs to have access to a large number of buyers across the country.
  • It will help them get better bargaining powers and realise higher prices by selling graded produce.
  • It will provide them with the facility to get their prices quoted and receive immediate payment, besides avoiding distress sales by helping them get loans from banks against warehouse receipts.

Warehousing Development and Regulatory Authority (WDRA):

  • WDRA was constituted in 2010 under the Warehousing (Development and Regulation) Act, 2007.
  • It is under the Department of Food and Public Distribution (DFPD).
Centre to unveil PM­ Kisan Bhai to end traders’ monopoly Schemes