PM Kisan Bhai Scheme: Now Farmers Can Get Better Prices, More Power, & Market Access

Agriculture schemes play a crucial role in supporting farmers' livelihoods. These initiatives offer financial aid and technological assistance, which help farmers to enhance productivity and income. Subsidies on seeds, fertilizers, and irrigation facilities, coupled with insurance coverage, provide a safety net against uncertainties. Therefore to help farmers towards sustainable growth and support government has launched yet another effective scheme called the PM Kisan Bhai (Bhandaran Incentive) Scheme.

PM Kisan Bhai (Bhandaran Incentive) Scheme

The Indian government is considering launching a new scheme called the PM Kisan Bhai (Bhandaran Incentive) scheme to help small and marginal farmers who cannot store their produce to get better prices. The scheme is expected to be implemented by the end of December, after a 10-day feedback period on the Agriculture Ministry's concept paper.

The goal of the scheme is to give farmers more control over crop prices by allowing them to choose when to sell, instead of being forced to sell their crops around harvest time when prices are typically low. The government plans to do this by providing financial support for storage and encouraging farmers to trade through the online platform e-NAM.

The concept paper acknowledges that the pledge finance facility is already available to farmers, but it also notes that this facility has limitations due to the high cost of carryover for farmers and the credit risk posed to bankers. The PM Kisan Bhai scheme seeks to address these constraints and give farmers more autonomy in managing their produce and maximizing their profits.

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PM Kisan Bhai Scheme- Objective

The primary goal of the Kisan Bhai scheme is to empower farmers by enabling them to retain their harvested crops for a minimum period of three months post-harvest. This strategic initiative aims to break away from the conventional practice where farmers are compelled to sell their produce immediately after harvest, allowing them greater control over the timing of their sales and, consequently, influencing the market dynamics to their advantage.

Explaination & Implementation

The PM Kisan Bhai scheme will first be piloted in seven states: Andhra Pradesh, Assam, Madhya Pradesh, Maharashtra, Rajasthan, Tamil Nadu, and Uttar Pradesh. This phased approach will allow the government to assess the scheme's effectiveness in a variety of agricultural landscapes and regional contexts before potentially expanding it nationwide.

The estimated cost of the scheme over the next three years, including the current fiscal year, is approximately ₹170 crore. This investment reflects the government's commitment to empowering farmers and improving their livelihoods.

The pilot phase will provide valuable insights into the scheme's design and implementation, enabling the government to make necessary adjustments before rolling it out on a larger scale. The feedback from the pilot states will also be crucial in ensuring that the scheme meets the needs of farmers and delivers on its desired outcomes.

Major Components of the Scheme

Warehousing Rental Subsidy (WRS)

   - Small and marginal farmers, along with farmer producer organizations (FPOs), qualify for the WRS benefit at a rate of ₹4 per quintal per month.

   - This subsidy is irrespective of the rate charged by warehouse operators, whether on a per quintal basis or area basis.

   - The WRS benefit is applicable for a maximum duration of three months.

   - Produce stored for 15 days or less will not be eligible for the subsidy, and the incentive will be calculated on a day-to-day basis.

Prompt Repayment Incentive (PRI)

   - The scheme introduces the Prompt Repayment Incentive (PRI) as a crucial component.

   - PRI aims to encourage timely repayment by providing additional benefits to farmers who promptly settle their outstanding amounts related to the scheme.

   - This component acts as a financial encouragement for farmers to manage their repayments efficiently.

Also Read:- SBI Kisan Samriddhi Rin: Get Up to Rs 50 Crore Agri Loan For an Easy Farming Operation

e-NWR

Issued in negotiable form, NWR receipts serve as collateral, backed by the Warehouse (Development and Regulation) Act, 2007, enabling financing of warehouse receipts regulated by the Warehousing Development and Regulatory Authority (WDRA).

Features of e-NWR

• Electronic Format: e-NWRs exist in electronic form, marking a digital evolution from traditional paper-based negotiable warehouse receipts.

• Repository System: The repository system is the source of information for e-NWRs, where registered warehouses issue them.

• Information Security: Confidentiality, integrity, and availability of e-NWR information are ensured by the Repository system, enhancing data security.

• Time Validity: e-NWRs come with a specified time validity, adding a temporal dimension to their functionality.

• Trading Platforms: All e-NWRs are tradable through off-market or on-market platforms in Commodity Exchanges, offering flexibility in trading.

Benefits of Electronic-Negotiable Warehouse Receipt (e-NWR)

• e-NWRs empower farmers and Farmer Producer Organizations (FPOs) with widespread access to numerous buyers nationwide, expanding market reach.

• Farmers gain increased bargaining power through e-NWRs, enabling them to negotiate better deals and secure higher prices, particularly for graded produce.

• The system allows farmers to obtain price quotations for their produce and receive immediate payments, streamlining financial transactions and promoting transparency in the payment process.

• e-NWRs play a crucial role in preventing distress sales by facilitating farmers in obtaining loans from banks against warehouse receipts. This financial support ensures that farmers are not compelled to sell their produce under duress, contributing to more favorable market conditions.

Conclusion

The introduction of the Kisan Bhai scheme and the utilization of Electronic-Negotiable Warehouse Receipts (e-NWRs) provide aid to small and marginal farmers who cannot store their produce to get better prices. By enhancing market access, improving bargaining power, facilitating transparent financial transactions, and mitigating distress sales, these initiatives contribute to promoting a more resilient and farmer-friendly agricultural ecosystem. It also ensures a sustainable and prosperous future for farmers across the country.

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