Kerala state government announced to fix base price of 16 agriculture product

 The first  scheme of its kind in India launched to protect the farmers from market fluctuation

Communist Party of India- Marxist (CPI-M) led Kerala state government has announced a scheme to fix the base price of 16 agriculture products.  The scheme designed to protect farmers from adverse price fluctuation will come into effect on November 01.

Kerala Government, in a first of its kind initiative in the country, has announced a base price of 16 agricultural produce, including vegetables, fruits and tubers.

The State Chief Minister Pinarayi Vijayan said that the base price would provide relief and support both traditional farmers and those newly farming the land. As many as 16 agricultural produce would be covered under the first phase. Crops such as tapioca, nendran banana, pineapple, bitter gourd, cucumber, snake gourd, tomato, cabbage and beans have been included in the base price, which would be 20 per cent above the production cost of the vegetables.

If the market price dipped below the base price, the produce would be procured at the base price and the money transferred to farmers’ accounts. The produce would be graded on quality and the base price fixed on that basis. There was also a provision to revise the base price regularly, the Chief Minister said.

The scheme would benefit a farmer with cultivation on a maximum of 15 acres in a season. They would have to register on the Agriculture Department’s registration portal after insuring the crop to get the benefit of the base price.

Initially, the registration would not be mandatory for farmers as the procurement is to happen through primary agricultural credit cooperative societies. The procured produce would be sold through the department’s markets or the societies marketing network.

The scheme also envisaged setting up of supply chain process such as cold storage facilities and refrigerated vehicles for transporting the produce to minimise wastage, he added.

The new base prices are beneficial for Kerala farmers because the cost of production, especially input cost, is high in the state because of the high wages. However, the scheme won't benefit plantation farmers like those of rubber and tea.

Project Director Abdulla Hashim of the Vegetable and Fruit Promotion Council Keralam (VFPCK) said that the scheme will help benefit small and marginal farmers with up to two hectares or five acres of land per crop per season. “This is basically a risk management scheme to protect farmers in the event of price fall,”

Nevertheless, the new policy has been celebrated by farmers organisations for its pro-marginal-farmer approach. Even the All India Kisan Sabha (AIKS) praised the state government’s move in a press release. They stated that the new base prices as well as procurement of paddy at Rs.2,750 per quintal which is about Rs.900 per quintal more than the centrally fixed MSP assures remunerative prices through cooperatives.


Hashim explained that this meant any farmer who receives prices lower than the base price for these 16 crops, will have the deficit amount directly transferred to their bank account.

Although he foresaw market glut situations to pose a challenge in marketing the agricultural products, he assured that the three central laws won't affect this policy or Kerala’s farmers because the state does not have an APMC law.

“Majority farmers of Kerala are small and marginal with small land holdings. There is no contract farming by big corporates in Kerala,” he said.

He also pointed out that Kerala farmers fared better than most professions during the lockdown period thanks to such support schemes by the government.

These prices will come into effect from November 1 and are calculated to address the problem of price fluctuation in the market. The amounts were determined at production cost plus 20 percent based on a study conducted by the State Agricultural Prices Board. Moreover, the government also included a per-hectare productivity limit to prevent any misuse of the scheme.

According to Agriculture Minister V. S. Sunil Kumar, this “historic decision” of the state Cabinet satisfies the greatest demand of farmers – to get a reasonable price for their products – deprived of which, impoverished farmers often turn to extreme measures. He also mentioned that the government decided to store vegetables through 559 centers.

“When the central government is moving forward with anti-farmer policies, the state government is moving forward by creating a model to protect the farmers, it is because there is no protest by throwing farmer suicides or products on the streets. This government has always tried to implement alternative models from the people's party,”

To get the badly needed money or sell perishable items, small farmers try to dispose of their produce quickly. The agro-based mills/factories and commission agents, who usually work as cartels, reduce demand to depress prices. Farmers are forced to sell their crop below the cost of production in times of prices crash.

Without minimum guaranteed support price for some crops, farmers suffer in years of good crop as well.
Despite trends of liberalisation and deregulation, the system of guaranteed minimum price is used in many countries to stabilise prices of farm produce. India too has the Agricultural Costs and Prices Commission, set up in 1968, to ensure a minimum guaranteed price to growers for their output.

                                                              Khalid Bhatti 

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