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India: Modified price stabilisation fund for plantations to come into force on April 1


The Commerce Ministry has decided to introduce a Modified Price Stabilisation Fund (MPSF) scheme for the plantation sector covering tea, coffee, rubber, tobacco and cardamom. The new scheme will be in force for five years from April 1, 2013. However, there will be an evaluation of the performance of the scheme by an independent agency in the fourth year and depending on the findings further extension of the scheme would be considered. The ongoing Price Stabilisation Fund scheme, launched on April 1, 2003, for 10 years, closes on March 31, 2013.

Considering the cyclical nature of international prices of these crops and the forecast of a downward trend in future, the Ministry has come up with the MPSF scheme not only to address the identified bottlenecks in the ongoing scheme but also to make it more beneficiary friendly, according to Commerce Ministry sources.

The MPSF scheme proposes to cover all growers in the sectors of tea, coffee, rubber, tobacco and cardamom (small and large), with an operational landholding of up to 10 hectares. All the grower members of the scheme would be eligible to join the MPSF scheme without paying any entry fee. The respective commodity boards would certify the landholding details of the growers.

The Price Spectrum Band (PSB) would be determined on the basis of the preceding five years’ (including the price of the year under consideration) moving average of the international price of the commodity.

PSB will be 30 per cent (+ 15 per cent to – 15 per cent). If the domestic price is within the PSB, above PSB or below PSB, the year will be categorised as normal, boom or distress respectively. The time schedule for PSB will be finalised by the sub-committee without any change.

No compensation will be paid in a normal or boom year. Only during distress years, eligible member growers would be compensated to the tune of Rs 12,000 per hectare of operational landholding up to 10 hectares subject to a ceiling of Rs 60,000. In case of consecutive distress years, the level of compensation would be enhanced by 15 per cent of normal compensation. No claim bonus of Rs 12,000 per hectare subject to a ceiling of Rs 60,000 is payable If there is no distress in any of the five years of operation of the scheme. The growers will be provided with ATM-cum-photo debit cards as a means to remove banking bottlenecks of the existing PSF scheme.

Under MPSF scheme, the growers will earn a higher interest of 8.5 per cent on deposits as against the present 3.5 per cent.

Meanwhile, the Confederation of Indian Small Tea Growers’ Association while thanking the Government for introducing the MPSF, has emphasised the need for launching an awareness campaign particularly to popularise the scheme among small growers. CISTA has suggested holding meetings immediately, two in Assam and one each in Dooars in West Bengal and Nilgiris in Tamil Nadu, as part of a familiarisation programme critical to the proper implementation of the scheme.

Source: Business Line

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