Agriculture Current Affairs

Recent schemes and current affairs related to Agriculture.

Agriculture Current Affairs

 AGRICULTURAL CREDIT

• Mechanisms of Agriculture Credit in India

• Priority Sector Lending;
• Interest Subvention Scheme (ISS);
• Kisan Credit Card (KCC) Scheme;
• Self Help Group – Bank Linkage Programme (SHG-BLP);
• Joint Liability Groups (JLG) Scheme.

 • Characteristics of Agricultural Credit

• Sources of Credit: Institutional Sources accounted for 72% of agricultural credit whereas non-institutional sources such as money-lenders and relatives constituted 28%.
• Among institutional credits – Scheduled Commercial Banks (79%), Cooperatives (15%), Regional Rural Banks (5%) and MFIs (1%)
• Loan waivers: Loan waivers worth Rs. 2.4 lakh crore (Almost 1.4% of GDP) were given since 2014-15.
• Increased share of Short-term loans: Share of short-term loans in agricultural credit increased from 51% in 2000 to 75% in 2018.

PRIORITY SECTOR LENDING

• Priority Sector includes the following categories:

• Agriculture
•   Micro, Small and Medium Enterprises
•   Export Credit
•  Education
•   Housing
•   Social Infrastructure
•   Renewable Energy
•  Others.

• Priority sector loans to the following borrowers are eligible to be considered under Weaker Sections category:-

• Small and Marginal Farmers o Persons with disabilities
• Scheduled Castes and Scheduled Tribes
• Distressed farmers indebted to non-institutional lenders
• Self Help Groups
• Artisans, village and cottage industries where individual credit limits do not exceed ₹ 0.1 million
• Beneficiaries under Government Sponsored Schemes such as National Rural Livelihoods Mission (NRLM), National Urban Livelihood Mission (NULM) and Self Employment Scheme for Rehabilitation of Manual Scavengers (SRMS)
• Beneficiaries of Differential Rate of Interest (DRI) scheme
• Distressed persons other than farmers, with loan amount not exceeding ₹ 0.1 million per borrower to prepay their debt to non-institutional lenders o Individual women beneficiaries up to ₹ 0.1 million per borrower
• Overdraft limit to PMJDY account holder upto ₹ 10,000/- with age limit of 18-65 years.
• Minority communities as may be notified by Government of India from time to time

• The activities covered under Agriculture are classified under three sub-categories viz.

• Farm credit,
• Agriculture infrastructure  
• Ancillary activities.

 • Priority Sector Lending Certificates (PSLCs) are a mechanism to enable banks to achieve the priority sector lending target and sub targets by purchase of these instruments in the event of shortfall.

ODISHA’S ‘KALIA’ SCHEME TO BE MERGED WITH CENTRE’S PM-KISAN

• • Merger of Krushak Assistance for Livelihood and Income Augmentation (KALIA) scheme is being done due to financial constraint.
  • In ‘Kalia’ scheme, farmers, mostly small and marginal cultivators, are entitled to get Rs 10,000 in two instalments for two crops in a year.
•           Landless agricultural farmers are also eligible to get Rs 12,000 per annum for three years.
  • While under PM-Kisan scheme, central government is providing annually Rs 6,000 in three equal instalments to about 14 crore farmers.
•  Pradhan Mantri Kisan Samman Nidhi (PMKISAN) is a Central Sector scheme with 100%  funding from Government of India.
• The entire responsibility of identification of beneficiary farmer families rests with the State / UT Governments.
  • According to the new guidelines, the farmers will get Rs 10,000 per annum as provided under the ‘Kalia’ scheme. (Earlier they used to get Rs 16000 from both schemes).
• The state government will give Rs 4,000 to farmers while the rest will be provided from PM-KISAN.
• Landless farmers will continue to get Rs 12,000 per year under the ‘Kalia’ scheme since PM-KISAN has no provision for the landless farmers.

FERTILIZER IN INDIA

Historical Background

• Fertilizer was critical to India’s Green Revolution so the government passed the Fertilizer Control Order in 1957 to regulate the sale, pricing, and quality of fertilizer.
• Movement Control Order was added in 1973 to regulate the distribution of fertilizer as well

•  No subsidy was paid on fertilizer before 1977. The oil crisis in 1973 increased the price of fertilizer leading to a decline in consumption and an increase in food prices.
• In 1977, the government intervened by subsidizing manufacturers.

• Aftermath of the economic crisis of 1991 Government decontrolled the import of complex fertilizers such as di-ammonium phosphate (DAP) and muriate of potash (MOP) in 1992. But, urea imports continue to be restricted and canalized. Fertilizers in India- an overview
• India is second largest consumer of urea fertilizers after China.
• India also ranks second in the production of nitrogenous fertilizers and third in phosphatic fertilizers whereas the requirement of potash is met through imports since there are limited reserves of potash in the country.
• It is one of the eight core industries.

Fertilizers can be classified in three categories namely-

• Primary,
• Secondary
• Micronutrients
   
• Primary fertilizers are further classified on the type of nutrients they supply to soil such as nitrogenous (urea), phosphatic (di-ammonium phosphate (DAP)) and potassic (muriate of potash (MOP)) fertilizers.
• Secondary fertilizer includes calcium, magnesium and sulphur while micronutrients include iron, zinc, boron, chloride etc.

• Fertiliser subsidy is estimated to be Rs 79,996 crore (Rs 53,629 crore for urea and Rs 26,367 crore for nutrient-based subsidy) for FY20.

• Nutrient Based Subsidy scheme

• Under this, government announces a fixed rate of subsidy (in Rs. Per Kg basis), on each nutrient of subsidized P&K fertilizers, namely Nitrogen (N), Phosphate (P), Potash (K) and Sulphur (S),
• It is applicable to 22 fertilizers (other than Urea) for which MRP will be decided taking into account the international and domestic prices of P&K fertilizers, exchange rate, and inventory level in the country.

UREA SUBSIDY

• The government plans to make the release of the ever-rising subsidy on urea far more targeted than now.

• Now, government is choosing for direct transfer (DBT) of urea subsidy to the beneficiary farmers’ bank accounts instead of DBT to firms based on point of sale.

• The farmer will pay the market price at the time of purchase of urea and promptly receive the subsidy amount in his/her Aadhaar-linked bank account.
• This move will reduce the leakage of organized subsidy and black marketing.
• Ceiling might be put on the Urea Subsidy so that the alleged overuse of the nitrogenous fertilizer could be curbed.
• The fertilizer subsidy will be directly transferred by the government to the farmer’s e-wallet and an e-wallet will be made available with the Rupay Kisan Card.

 Urea production and pricing mechanism

• Urea is made available to farmers at statutorily controlled price.
• The difference between the delivered cost of fertilizers at farm gate and MRP payable by the farmer is given as subsidy to the fertilizer manufacturer/importer by the Government of India.
• At present, there are 31 urea manufacturing units, out of which 28 urea units use Natural Gas (using domestic gas/LNG/CBM) as feedstock/ fuel and remaining 3 urea units use Naphtha as feedstock/ fuel. Urea policy India
• Urea is the source of nitrogenous fertilizer and it is heavily subsidized by the Central Government. Today urea is the only fertilizer which remains controlled.
• Urea Subsidy is a part of Central Sector Scheme of Department of Fertilizers and is wholly financed by the Government of India through Budgetary Support.
• Urea subsidy also includes freight subsidy for movement of urea across the country.

• The New Urea Policy-2015 (NUP-2015) has been notified by Department of Fertilizers in 2015, extended till 2019-2020, with the objective of maximizing indigenous urea production, promoting energy efficiency in urea production and rationalizing subsidy burden on the government.

• The continuation of Urea Subsidy Scheme till 2020 will ensure the timely payment of subsidy to the urea manufacturers resulting in timely availability of urea to farmers.
• Subsidy on production costs is provided when their production is beyond a certain production capacity as notified.

FOOD GRAIN MANAGEMENT

  FOOD CORPORATION OF INDIA (FCI)

 Cabinet Enhanced Authorized Capital FCI from Rs.3,500 crore to Rs.10,000 crore.

• Food Corporation of India (FCI) is the nodal agency under Ministry of Consumer Affairs, Food and Public Distribution responsible for the procurement, storage and movement of food grains, public distribution and maintenance of buffer stocks.
• FCI procures food grains at minimum support price (MSP) from farmers on an open ended basis (i.e., accepting all the grains that are sold to it by farmers), provided the food grains meet Govt. of India’s uniform quality specifications. The procurement is also done by State Government Agencies (SGAs) and private rice millers on behalf of the FCI.
• All the procured food grains form the Central Pool. The grains are moved from the surplus states to the consuming states for distribution and for creation of buffer stocks and stored in FCI godowns.
• The food grains are also disposed by FCI and State Governments through sale under Open Market Sales Scheme (OMSS) i.e., selling food grains at predetermined prices in the open market from time to time to enhance the supply of grains especially during the lean season and thereby to moderate the open market prices especially in the deficit regions.
• In India, food grains are stored using traditional structures by small farmers.

• The surplus grains are stored with government agencies like: Food Corporation of India (FCI), Central and State warehousing Corporations

• The economic cost to FCI includes acquisition cost of food grains at MSP, procurement incidentals (e.g. labour & transport charges, godown rentals) and distribution cost (freight, handling, storage & interest charges, losses during storage etc).

• Difference between Economic Cost and Central Issue Price (CIP) of food grains under various schemes (including National Food Security Act, 2013) is the operational loss to FCI and is reimbursed by Government of India as food subsidy.

  Negotiable Warehouse Receipts (NWR)

• NWR are issued by registered warehouses enables farmers to seek loans from banks against NWRs
• It enables them to extend the sales period of modestly perishable products beyond the harvesting season.
• Consequently, NWRs can avoid distress sale of agricultural produce by the farmers in the peak marketing season.

Types of Storage in India

• Underground Storage Structures: These are dugout structures similar to a well with sides plastered with cowdung. These are safer from threats from various external sources of damage, such as theft, rain or wind.

• Surface storage structures: Bag storage and Bulk or loose storage.

• For large scale storage:

• CAP Storage (Cover and Plinth): It is commonly used storage method which is economical but loss of grains is inevitable (vulnerable to wind damage). It is temporary storage method of storing crops in outdoor stacks of bagged grain, covered with a waterproof material.
• Silos: In these structures, the grains in bulk are unloaded on the conveyor belts and, through mechanical operations, are carried to the storage structure. The storage capacity of each of these silos is around 25,000 tonnes.

• Warehousing: These are scientific storage structures especially constructed for the protection of the quantity and quality of stored products. Ex: Central warehousing corporation (CWC), State Warehousing Corporations (SWCs), Food corporation of India (FCI)

PDS REFORMS

 • To bring automation in Public Distribution System (PDS), electronic point of sale(ePOS) was initiated in Punjab. o Under ePOS, beneficiaries can get their ration just by getting their fingerprints matched at Aadhar enabled ePOS machines instead of having to show their ration card.

 • Andhra Pradesh was first state to adopt automation of PDS following which directives were issued nationwide to all states to carry out automation.

 About PDS

• PDS facilitates supply of food grains and distribution of essential commodities to poor through network of Fair Price Shops (FPS) at subsidized price.
• Operational responsibility including allocation within State, identification of beneficiaries, issue of ration cards, distribution and supervision of foodgrains through FPS rests with States.
• To further focus on poor, Targeted Public Distribution System (TPDS) was launched in 1997.
• Plan Scheme on ‘End-to-End Computerisation of TPDS Operations’ is being run in collaboration with all States/UTs under 12th Five Year Plan (2012-17). Validity of scheme has been extended upto March 2020.

• It includes Digitization of ration cards/beneficiaries’ data, Automation of FPS (Aadhar seeding and ePOS) etc. One nation, one ration card initiative

• The Centre has designed a standard format for ration cards and has asked state governments to follow the pattern while issuing fresh ration cards.
• In a step towards the launch of ‘One Nation, One Ration Card’ by June 2020, Ministry of Consumer Affairs, Food and Public Distribution is working to integrate 12 states on a single portability platform – Public Distribution System Network (PDSN).
• It will enable beneficiaries of National Food Security Act (NFSA) to purchase subsidized food grains from any fair price shop in these states.
• ‘One nation, one ration card’ scheme will let ration card holders buy food grains anywhere in the country.
• Ration cards are usually issued by states and beneficiaries now has access to ration shop in issuing states alone.

 Integrated Management of Public Distribution System

• The main objective of the scheme is to introduce nation-wide portability of ration card holders under National Food Security Act, 2013 (NFSA), through 'One Nation One Ration Card' system.
• It enables the migratory ration card beneficiaries to lift their entitled foodgrains from any Fair Price Shop (FPS) of their choice in the country by using their existing ration card issued in their home State/UT after biometric authentication on electronic Point of Sale (ePoS) devices installed at the FPSs.

 Excess Buffer Stocks

• With food grain stocks held by Food Corporation of India (FCI) in the central pool has hit 6 year high, the Government plans to increase allocations to belowpoverty-line (BPL) families.
• The major reasons behind it are oversupply of food grains, lack of coordination between  stakeholders, open ended procurement and no automatic liquidation rule.

Price Deficiency Payment Sytem

• Recently, Haryana decided to bring more crops under Bhavantar Bharpayee Yojna (BBY) scheme to ensure farmers of fair prices for their produce and emphasising on diversification of crops.
• It is Price Deficiency Payment scheme of Haryana which aims to reduce farmer’s risk of getting the low prices of these vegetables in the market by providing them a protected price.
• Under Price Deficiency Payment, farmers are proposed to be compensated for the difference between the government announced Minimum Support Price (MSP) for select crops and their actual market prices.
• Central Scheme ‘Pradhan Mantri Annadata Aay SanraksHan Abhiyan’ (PM-AASHA) also has one of the component as Price Deficiency Payment scheme while other components include Price Support Scheme (PSS) and Pilot of Private Procurement and Stockiest Scheme (PPSS).
• Other states having similar schemes include the Bhavantar Bhugtan Yojana (BBY) by Madhya Pradesh and the incentive given to milk farmers by Karnataka.

 MARKET INTELLIGENCE AND EARLY WARNING SYSTEM PORTAL

• Recently, Ministry of Food Processing Industries (MoFPI) launched Market Intelligence and Early Warning System (MIEWS) portal.
• It will provide ‘real time monitoring’ of prices of tomato, onion and potato (TOP) and for simultaneously generating alerts for intervention under the terms of the Operation Greens (OG) scheme.
• It will enable the government to monitor the supply situation for timely market interventions and price stabilisation in case of a price crash during a glut.
• Portal will disseminate information related to TOP crops such as prices and arrivals, area, yield and production, crop calendars and crop agronomy, in an easy-to-use visual format.
• Operation Greens launched by MoFPI, with an outlay of Rs 500 crores, aims to stabilize the supply of TOP crops and to ensure availability of TOP crops throughout the country round the year without price volatility.

Reasons for price fluctuations

• Monsoon dependency,

• Changing pattern of climate,
• Cobweb phenomenon,
• Distorted price support system (MSP),
• Inadequate infrastructure etc.

  Cobweb phenomenon

• Agricultural products show “cobweb” phenomenon, wherein production responds to prices with a lag, causing a recurring cycle of rise and fall in output and prices.
• This reflects the behavior of farmers who base their sowing decisions on the prices observed in the previous period, and accordingly over- or under-produce crops, triggering price cyclicality.