MOONG PROCUREMENT PILOT IN PUNJAB NEEDS REFINEMENT
Agriculture development in Punjab in the last 55 years was pivoted on production and procurement of paddy and wheat for the public distribution system. From 1967 to early 1980s farmers added buckets of water while loading tractor trailers with grains. The Food Corporation of India (FCI) not only procured moist grain for the hungry nation but also happily paid high charges (Mandi fee, RDF and Arhtiya commission) over and above the MSP. Sometimes the Governments of India (GoI) or Punjab (GoP) paid additional bonus. With the country becoming food self-sufficient, FCI started enforcing Fair Average Quality (FAQ) specifications around 1985.
Although the centre of gravity of national food security has moved away from Punjab (with 23 and 16 states contributing rice and wheat to the central pool, there is hardly any centre of gravity), the mindset of 1970s persists in Punjab’s political, farming and agriculture technology circles. This is depriving Punjab farmers of the benefits from the emerging opportunities. The latest examples include Punjab farmers not benefitting from soaring domestic and global prices of cotton, wheat, and other commodities. Consumers in other states do not have high opinion of rice and wheat supplied by Punjab. Salvation of Punjab agriculture lies in shifting some area from low value, high volume, natural-resource-depleting rice-wheat cycle to high value commodities.
For improving farmer livelihoods, Punjab should produce high quality commodities for domestic and global markets. Under a welcome initiative, the GoP has procured moong under GoI’s Price Support Scheme (PSS). Three agencies, Markfed, Mandi Board and Department of Agriculture were involved in this operation. Benchmarks established in the first procurement season will determine whether the fiscally constrained GoP is able to sustain it and extend it to other crops. With the benefit of hindsight, I believe if the FCI had insisted on FAQ specifications for wheat procurement in 1967, Punjab agriculture might have followed a better trajectory.
PROCUREMENT PARAMETERS
The original procurement by Markfed, the nodal agency, was scheduled from 1 June to 31 July 2022. To help farmers whose crop was delayed, procurement was extended to 10 August. Total market arrivals were 46,329 metric tons (MT). Of this, 2,559 MT conforming to the GoI’s FAQ specifications was procured under PSS for NAFED at Minimum Support Price (MSP) of Rs 7,275 per quintal. Another 2,963 MT conforming to the revised specifications was purchased for the State Pool.
Contrary to erroneous reports that payments were made in 2–3 instalments, the entire amount of Rs 40.17 crore for the NAFED and GoP purchase was directly credited in farmers’ accounts within 2–3 days of procurement in one instalment without attaching any strings. As expected in any new initiative, there were teething problems in the beginning. These were appropriately resolved.
KEY ISSUES
Major procurement in five Mandis: Of the total market arrivals, 84% was procured at Jagraon (55%) (Photo 1: From The Tribune), Mansa (14%), Tapa (6%), Sardulgarh (5%) and Moga (4%) Mandis. Fazilika and Tarn Taran districts received 791 and 727 MT respectively. Six districts received 99 to 458 MT. Three districts received 7 to 33 MT. Six districts did not receive any moong. Of 40,796 MT purchased by the private traders, 62% was at Jagraon Mandi alone. For procurement efficiency, Punjab needs not more than 3–5 procurement centres, including Jagraon which is centrally located. With potential for promoting oilseeds and other pulses in the State, the goal should be to develop Jagraon Mandi as the Hapur Mandi of Punjab in 5–10 years.
Sub-par quality: Only 5.5% produce conforming to the GoI quality specifications is lowest in the country. Due to poor quality, Punjab could not supply another 2,700 MT to NAFED. Even with the relaxed quality specifications, only 6.4% additional produce was procured for the State Pool. Comparatively better quality moong arrived at Tapa and Sardulgarh. Possible reasons of poor quality include late sowing, poor quality seed, lack of stringent attention to FAQ specifications while approving the varieties, harvesting of unripe crop, defoliant sprays to hasten maturity for early harvesting, lack of appropriate modification of combine harvesters, and deficient farm advisories. It should not surprise, if hot summer is made the scapegoat to hide inherent deficiencies of the technology system. Of course, June-July showers resulting in dis-coloured grain are an unavoidable risk.
While quality of moong arriving in Barnala Mandi was at par with the state average, in nearby Sunam quality was poor. Reason: the combine harvesters in Sunam area were not appropriately modified for moong harvesting. Instead of blaming the quality-maintaining procurement system (Photo 2: From The Indian Express), the Farm Unions should have looked into the real cause of tardy procurement. Such arm twisting coercive tactics to procure sub-standard produce will not help crop diversification in Punjab.
Area under moong: As per Department of Agriculture (DoA) reports, moong area increased to 52,270 hectares (Ha) in 2022 from 25,000 ha in 2021. This appears an exaggerated figure as many progressive farmers said that none from DoA visited them. Not a single grain arrived in the markets of six districts with 1,660 ha under moong. Similarly, only 70 MT arrived in three districts with 1,130 ha area. A small quantity from these nine districts would have arrived in Jagraon and other Mandis.
The DoA area estimate should be taken with a pinch of salt. It should be compared with Zaid e-Girdawari figures of the Revenue Department. The best estimate in future should be obtained by Punjab Remote Sensing Centre as there is hardly any other crop in end May. It should be ensured that the dominating big brother Agriculture Department is not allowed the arm twisting that its area estimate is a Gospel of God.
Market arrival in 2021 was 29,800 MT, suggesting that yield in 2022 was 25% lower than last year, if Agriculture Department area estimate is correct.
PROMISING FEATURES OF PROCUREMENT
The promising features of moong procurement included the followings:
- Direct benefit transfer to farmers without involvement of Arhtiyas.
- Direct procurement by Markfed saving 2.5% Arhtiya commission.
- Dispensing with RDF and Marketing Fee, which is an indirect tax on farmers (except for paddy and wheat) as the traders bid correspondingly lower price. The GoP should continue with this approach as it extends PSS to other crops.
- Persisting with quality requirements for Govt. procurement and not procuring below-FAQ-specifications produce. Otherwise, Markfed would have ended up with a huge expenditure and an unmanageable poor quality inventory. The procured moong is meant for human consumption and should meet the specifications. Punjab cannot afford buying substandard moong @ Rs 73 per kg and then disposing it off as cheap animal feed.
- Requirement of Fard (certified record of actual cultivation) for sale, removed a potential loophole which could be exploited by traders for recycling moong at MSP or for claiming deficiency price after buying it cheap from the farmers.
- Paying deficiency price amounting to about Rs 40 crore to the farmers selling below MSP.
DEFICIENCY PRICE PAYMENT
Procurement of 40,796 MT, not conforming to FAQ specifications, was handled by Punjab Mandi Board. It was purchased by the private traders at prices ranging from Rs 4,500 to 7,000 per quintal. Unlike direct benefit transfer for NAFED and GoP purchase, I suspect (but could not confirm it) the payment to the farmers was through the Arhtiyas. These farmers were also paid proportionate deficiency price.
In view of GoP’s financial constraints, ceiling of Rs 1,000 per quintal on deficiency price (MSP minus sale price) was logical. Moong procurement should be aimed at promoting crop diversification while maintaining the prescribed quality norms. It should reward farmers who maintain quality vis-à-vis those whose produce is sub-par. Farmers will respond to carefully calibrated price incentives/disincentives. The present approach, however, did not disadvantage those farmers whose produce was moderately sub-par and were able to sell @ Rs 6,275 or higher per quintal. This approach should be fine-tuned for incentivising farmers to improve quality. It may be necessary to fix the deficiency price payment ceiling as a specified percentage of MSP rounded off to the next hundred and a somewhat discounted deficiency price for lower quality.
Excessive emphasis of Punjab Mandi Board on brick and mortar infrastructure and collecting small RDF and Mandi taxes from minor crops is a deterrent against crop diversification. The middle and upper level technical manpower and expenditures of the Board give the impression that it is a branch of Public Works Department and not a futuristic-looking, agile marketing organisation focussed on empowering farmers to benefit from emerging domestic and global opportunities.
MOONG PROCUREMENT IS NOT AN EXTENSION OF PADDY AND WHEAT PROCUREMENT
Instead of nit picking, opposition parties and habitual critics should understand that moong procurement is not an extension of open-ended paddy and wheat procurement where the GoI meets all the costs. Under the Price Support Scheme, the GoP has to meet the costs of procurement above 25% of the produce. In addition, all PSS procurement must conform to GoI’s quality specifications.
One major drawback this year was late announcement of moong procurement in the first week of May. Consequently, sowing continued up to late May, much later than the recommended time of March 20 to April 10, resulting in low yield and poor quality. For improving quality and yield, moong should follow potato, mustard, or sugarcane and not wheat, with a caveat that it should not be promoted in the south-western cotton belt. Cultivation of moong there will enhance the risk of pest attack on cotton.
The PAU should consider if it is possible to change the sowing window from March 15 to April 5. The reason for this is that with wheat crop near maturity, the Power Corporation releases minimal electricity from the first week to end April to minimise the risk of burning the standing wheat crop from electricity sparks, further delaying sowing of moong. Late sowing also results in discoloured grains and high moisture content. Farmers should be incentivised for early sowing by announcing that the procurement date will not be extended beyond July 31.
OVERALL, Markfed has done a good job in implementing this pilot operation despite numerous handicaps. Leadership of the parastatal was receptive to good suggestions and prompt in making mid-course corrections. Mandi Board and Agriculture Department, however, need to considerably improve their performance. The pilot operation benefitted 20,500 moong farmers — 3,400 received full MSP and 17,100 received partial MSP plus deficiency price.
SUGGESTIONS FOR SUMMER MOONG PROCUREMENT IN 2023
- Issue the notification latest by February 15, 2023, that Markfed will procure moong from June 1 to July 31, 2023, stating that only the produce meeting Fair Average Quality specifications will be eligible for MSP.
- Notify that procurement will be only at Jagraon, Tapa and 2–3 other specified Mandis. The Mandi Board should make major investments in Jagraon Mandi for large scale mechanised drying, cleaning, and grading. Installation of size graders and colour sorters has the potential to make Punjab moong (and other pulses) more attractive to the traders and consumers.
- Punjab State Warehousing Corporation should develop large capacity warehouses near these Mandis and get these accredited by Warehousing Development and Regulatory Authority. The GoP should initiate action to operationalise Negotiable Warehouse Receipts in the State.
- Organise training camps and issue comprehensive farm advisories about timely planting after potato, mustard and sugarcane, use of good quality seed, proper plant population, use of pneumatic planters where possible, avoiding use of defoliants, harvesting by appropriately modified combines, etc.
EMPOWER MOONG GROWERS CLIMB VALUE-ADDITION LADDER
Moong retail price ranges from Rs 150 to 165 per kg. Thus, even the MSP recipient farmers (17% of total) got only 50% of consumer price. Others received a lower share. As emphasised in my earlier piece (The Tribune July 11, 2022), for maximising farmer gains, there is an urgent need to organise farmers into Farmer Producer Organizations (FPOs) and link them with input and output markets. Database of 20,500 moong producers available with Punjab Mandi Board should be used to form about 10–20 FPOs by February 2023.
To develop vibrant FPOs, Punjab Agricultural Management and Extension Training Institute (PAMETI), Ludhiana should be strengthened by appointing a full-time Director. Instead of being an agriculture production specialist, his strength should be in agribusiness promotion, marketing, mentoring of farmer collectives and managing group dynamics. It is of paramount importance to ensure the autonomy of PAMETI as enshrined in its registration under the Societies Act 1860. Making it a subsidiary of Department of Agriculture by designating Joint Director (Extension and Training) as the Nodal Officer for drawing salary of PAMETI staff, instead of Director PAMETI, is a retrograde step. With this arrangement, the clause “The Director shall be the Principal Executive Officer of the Society” is meaningless. This anomaly should be rectified, otherwise PAMETI will become a production oriented appendage of Department of Agriculture, defeating the very purpose of its establishment.
PAMETI should, inter alia, link FPOs with bulk buyers like Haldiram, Bikanerwala, Tata Group, Reliance, Future Group, and other organised retail. By assuring consistently good quality pulses, the FPOs can supply them value-added dal packets and receive a price above the MSP, like many FPOs in Maharashtra and other states are doing. For supplying premium quality pulses (Photo 3), some FPOs or their federations should be provided technical backstopping and RDF funds for developing pack houses, including size graders and colour sorters. Punjab Mandi Board should exempt the FPOs from RDF and Mandi fee and also allow them to receive commission at par with the Artiyas. In the absence of such investments, Punjab will continue to languish at the bottom of FPO pyramid in the country.
(Acknowledgements: This post greatly benefitted from sharing of ideas and real time data through video conferences by the Markfed team proactively led by Managing Director Sh. Ramvir. Wisdom and practical observations of Sh. Inderjit Sekhon were of great help. Dr Nachhattar Malhi and Avtar Dhindsa gave valuable suggestions.)
