Harshit Singh(LLM 2019 roll no 11 )

Assignement -2

This dissertation “The review of Price Deficit financing Scheme and its Impact on Agricultural
Prices: A case Study of APMC Jabalpur M.P”1 is basically the review of Bhavantar Bhav
Yojana of Madhya Pradesh government which was launched on pilot basis in 2017 in the
backdrop of farmers protest in MP for adequate prices for the crop. This study looks the impact
of this scheme on overall prices of agriculture commodities and farmers income. Study is
conducted in Jabalpur Krishi Upaj Mandi to see the impact, interview was conducted with
numbers of farmers and officials to get the ground reality and how the scheme affects the prices
in market. Basically under the price deficit scheme govt. transfers the difference between the
MSP and model price. Hence if farmer sells his crop in mandi and get less than model price he
gets the difference amount in his account by the government. This scheme was introduced
basically to ensure that farmers gets adequate price for their produce.

There are mainly four objectives of the study first is to review the implementation of the scheme,
to examine the impact on modal prices of major agricultural commodities, to assess its impact on
farmers income, and identify challenges in implementation of this scheme by farmers and traders
and proposing certain solution. Author has clearly described the background how the scheme2
came and what are price support through which govt. ensures the adequate price to the farmers.
She explains in very first paragraph how price fluctuation affects the farmer’s income and how it
depends upon the production of crop.3 The significance of the price policy is very evident as
more than 50% population lives in this country depends on agriculture. Most of them live in rural
India. She also discusses various studies which show that the farm household income is below
poverty line4. It makes it very important for govt. to bring price stability in market through govt.
intervention and ensure for adequate price. And the study area itself had 26.5% 5farms income
below poverty line that is much below the national average and a cause for concern. Also in the
study see shows how small and marginal farmers who are not able sell their crops in Mandis and
were not getting minimum support price making their condition worst.

She in chapter 2 of her thesis discusses the literature review and discusses some studies on
agricultural policy, reports, procurement of agricultural produce by govt. and affect seasonality
on price. She highlights certain studies which talk about agri. Price and how it is affected and
then other studies which talk about agri. market. She talks how important is price of agri.
commodity and what different factors which affect it. In one study it is shown that when market

1
Submitted by Subhi Patel, for fulfillment of her MSC(agriculture) in agriculture economics, in BHU.
2
Pg no 33,34.
3
Pg no. 1.
4
Fig 1.1 in pg no. 3
5
Fig1.1 MP.
stabilization activities were terminated negative returns were observed.6 The earlier studies also
show how the effects of govt. intervention through MSP was limited to places where govt.
Procure. Hence procurement mechanism is very important as she discusses it, that is large
number of farmers sold their crop at prices below the MSP, because they sold it outside the govt.
agency hence were not able to got MSP. Later when she interviewed also she found instances
where govt. fixed certain amount over which they not accept, in those cases also farmer has to
sold it open market.

She uses a mix of secondary and primary resources to show the point. She also uses different
committee’s reports and recommendation on price of farm produce and studies about the
awareness of farmers about MSP and its affect on sowing. In most of the studies she only give us
glimpse what the paper is about and does not go into its critical evaluation or comparison with
other papers, it is more like little intro what previous studies has included it not get dipper into it
to evaluate the earlier studies more constructively. She just goes topic wise and move on to other
topic, she does not critically check or shows it is applicability in her study. And at the she does
not conclude about the literature review it just end with last topic. She did not discuss the overall
conclusion or relevancy of these materials to her study.

In study she does not clearly mentions hypothesis which can be tested or not she starts with basic
question of studying its impact of new scheme on farmers and their income through conducting
small survey which largely consists of farmers and officials. It is more like fundamental study
(through survey). In the study she had certain stated object which she wants to know like
schemes impact on farmer’s income, overall prices of produce, and identify challenges to the
scheme. She in the third chapter discusses the research methodology used for this study, date and
other statistical tools and techniques to the objective. She explains why Jabalpur was selected as
it is the central mandi of region and also on the basis of number of arrivals of farmers in this
mandi. She randomly selects 25 registered in the scheme and 25 non registered, and does not
give tell whether they are small and marginal farmers or rich farmers. Secondary data on
agriculture procurement was taken from Krishi Upaj mandi Jabalpur, state mandi board and
agmarket.in.. She analyzed the data through garrets ranking of before the scheme and after the
scheme. She also used the seasonality index of crops under scheme. As the sample size is not
very big enough she did not use volunteers to collect data. For collecting data she drafted a
questionnaire which included the socio economic profile of farmer like gender, class, education
etc. under the second heading she tried to gauge the awareness about the scheme and different
terms which are important for evaluating the difference like model price, which crops are
covered, how to get registered and whether they registered themselves or not. Under the third
heading she asked them about the cropping details like crop which grown, number of area, yield,
price received etc. Under the fourth head she asked the farmers about the issues they faced under
the scheme after its implementation, like what are the hardships to get the benefit under the

6
Pg no 10.
scheme. And at last she asked them to rank constraints in like lowering of mandi prices, cartel
formation by traders, registration boundation etc.

In chapter 4 she describes the area of Jabalpur their geography, types of crops, status of
agriculture etc. she describes the mandi area and sub mandis and also the number of farmers
arriving to sell their crops. She tells about the type of soil Jabalpur regions has predominantly
loamy soil across Narmada River and black soil in eastern parts. She also discusses the
administrative arrangement number of blocks in Jabalpur district. Demography of Jabalpur is
shown, also with it number of farmers are is shown, further diving it to small, landless, medium
and large farmers. This data was taken from jnkvv.org.

Under chapter 5 she discusses the result of the study after the analysis of the data. She discusses
it with line of her objectives and stated with the overview of the scheme, shows in table which
crops are included under the scheme. Like soyabean, ramtil, urad, maize are included. She also
show one photo of mandi where the crops and their MSP is written. She shows the procedure
under the scheme which farmer has to follow to avail the benefit, starting from the registration
and to transfer of price deficit in farmers account. Then describes each process from registration
to the transfer of money process. And also how model prices are calculated by government etc.
then she shows the modal price for crops in Jabalpur mandi through table. In the next table she
shows the number of farmers registered under the scheme. Then she talk about the awareness of
the scheme here 50% of farmers were knowing about the schemes they did not have any
Knowledge about the model prices but when asked whether in future they will register or not
most of them said that they will register. She suggest for development of information
dissemination of price of crop. After this she comes to study what is the schemes impact on
farmer’s income and farmer received what price for their produce. As gram and urad are major
crop she takes it, shows that only 20% farmers receives price more than MSP after getting deficit
major reason behind this is not good quality produce. Hence she concluded that there must
greater efficiency and perfection in market. And scheme must take into consideration of the
quality of crop. Later she discusses how the model prices changes after the implementation of the
scheme for different crops. Like in urad their was no change. After this in next heading she
discusses the issues and challenges to the scheme like lowering of mandi price due to collusion
traders they intentionally keep the prices low. Hence the profit margin of traders got increased
instead of farmers. The next point is about the delay in receipt of bhawantar i.e difference and its
delays their payment and also in many cases fewer amounts was deposited without any
information.

In the last chapter she gives summary of findings and conclusion of her study and also suggest
certain measures to improve the scheme so that larger number of farmers can take benefit from
the scheme. She concludes that the govt. intervention is necessary for maintaining the price of
farm produce. She suggests that govt. should include more diversified crops so that different
crops will be eligible to get the difference and it will eliminate the problem where farmers
growing other crop were not eligible. She also recommends to curb the lowering of bidding
prices by collusion as it the affects the farmer profit, though she recommends or minimum proce
of purchase but the lobby of traders will never accepts these measure than also we have to take
measures to save the interest of farmers. Though she recommends certain measures but did not
ask for future research but it can be done to find a solution for cartelization and lowering of
prices and also effective storage for perishable goods because these are the produces which often
see the huge price crashes due to the surplus as the farmers do not have any storage facility to
store and sell at later point of time hwen there good price is offered.

The study is very important as it looks into the impact of scheme which is introduced to give
farmers adequate price by replacing earlier scheme which where govt. directly procured and
those farmers will get benefit only those who sell their produce to govt. agency. This schemes
major aim is to cover large farmer base and those who sell in open market as they do not had the
means to sell it to govt. because there are very few procurement centers it is very costly to
transport, hence most of the farmers sell their crops to the traders. Hence the first thing is very
clear if govt. wants give the benefit of the scheme to large number of farmers they must ensure
that large number of farmers are registered before the sell so that they take benefit of the scheme,
as it is shown in the study that many farmers were not able to register for scheme though they
knew about it, so information penetration and registration under scheme must be available at
every village so that large number farmers can be benefitted by the scheme. And second point is
about cartelization7 which is hampering the scheme majorly because the benefit is not going the
farmer instead it is going directly to the traders, as they by colluding put the price level very low.
It affects both the farmers and govt. revenue. Cartelization has been one of the biggest failure or
negative aspect of this scheme as it create an artificial price in the market. In recent news reports
it was also said that state govt. may scrap it due to cartelization. In the study also author raise the
issue of cartelization and lowering of prices in the market. So the future of this scheme depends
how govt. do away with cartelization so that benefit of the scheme can go directly to the farmer.

As the income farmer is important and it can be assured by giving them adaequate price for their
produce then their income can rise. As govt. has project of doubling farmers income by 2022 8 it
is very to have studies on schemes which can provide farmer price for their produce. Though no
solution will be complete but by regular research on its impact we can overcome these defects.
As author also shows that how income of farmer is dependent on prices of produce it is very
important. She in her paper discusses the role of govt. intervention in stabilizing the price. Hence
the schemes such as bhavantar which aims to provide to compensate the loss to the farmers
directly is important step. As large population in India is dependent on the agriculture and govt.
aims to double their income it become the priority of govt. to stream the procurement process by
adding number warehouse for storing crops for perishable and non perishable produce, and
expand the infrastructure of mandis and bring transparency in mandis through which

7
Emerging critical situations and threats in India’s agricultural economy issue 4 march 2018., Alert 2 pg no.2
8
https://economictimes.indiatimes.com/news/economy/agriculture/govt-to-double-farmers-income-by-2022-by-
focusing-on-7-sources-of-income-says-economic-survey/articleshow/70074052.cms?from=mdr
cartelization can be controlled. As author suggest fix certain price below which traders cannot
bid. Though this not the only method through which the income can be increased we have to
choose the path of diversification then only we will be able to raise the income of farmers.