Relevance: GS III (Agriculture – Marketing & Subsidies) | Source: The Hindu

The News: The Market Crash: Unseasonal rains and bumper harvests caused potato prices in Uttar Pradesh to crash to a dismal ₹2-₹4 per kg. In response, the Centre announced the procurement of 20 lakh tonnes at ₹6.5/kg to stabilize local markets.

• Agrarian Distress: Farmers face severe losses because their actual cultivation cost (seeds, fertilizers, labour) is roughly ₹12/kg. The government’s procurement price covers only half of their expenses.
• The Policy Framework: Unlike cereals, perishable horticultural crops (like potatoes and onions) are not covered by the regular Minimum Support Price (MSP) regime. Instead, they are procured under the ad-hoc Market Intervention Scheme (MIS).
• Structural Solution: Temporary procurement acts only as a band-aid. The administration must focus on value addition (processing raw potatoes into chips or starch) and expanding rural cold storage networks using the Agriculture Infrastructure Fund (AIF) to prevent forced “distress sales.”

The Trap

• The “MSP for Vegetables” Trap: UPSC frequently tests procurement regimes. An exam statement might claim, “The Commission for Agricultural Costs and Prices (CACP) recommends MSP for major vegetables like potatoes.” Incorrect. Perishable horticultural crops do NOT fall under the MSP regime; they are covered exclusively under the Market Intervention Scheme (MIS).

UPSC Value Box

With reference to the procurement of agricultural commodities in India, consider the following statements:

1. The Commission for Agricultural Costs and Prices (CACP) recommends the Minimum Support Price (MSP) for mandated cereal crops as well as major horticultural crops like potatoes and onions.
2. Under the Market Intervention Scheme (MIS), any financial losses incurred during the procurement process are borne entirely by the Central Government.
3. The National Agricultural Cooperative Marketing Federation of India (NAFED) acts as a central nodal agency for procurement under the Market Intervention Scheme.

Which of the statements given above is/are correct?

(a) 1 and 2 only

(b) 3 only

(c) 2 and 3 only

(d) 1, 2 and 3

Correct Answer: (b)