Procurement and payment: this is how and why Maharashtra’s online system works

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Last week, the Chief Minister of Punjab, Capt Amarinder Singh, described as “another provocation” to agitate farmers the decision of the Food Corporation of India (FCI) to request land registers in order to make payments electronic direct for the purchase of paddy and wheat.

Sharing land records and making online payments directly to farmers’ bank accounts is nothing new – Maharashtra’s sugarcane farmers accepted payments in this way even when bank penetration was much lower in the country. . How does the system work in Maharashtra?

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MSP procurement

Unlike Punjab or Haryana, the role of the CFI in government-led minimum support price (MSP) procurement operations is minimal in Maharashtra. Given the crop profile of the state, the main players in MSP operations in Maharashtra are the National Federation of Agricultural Cooperative Marketing (NAFED) and the Cotton Corporation of India (CCI).

NAFED operates through sub-agencies such as the Maharashtra State Cooperative Marketing Federation and the Vidarbha Cooperative Marketing Federation. CCI appoints the Maharashtra State Co-operative Cotton Producers Marketing Federation as a sub-agent mainly for procurement in Vidarbha districts.

These two central agencies only intervene to obtain supplies when the average negotiated prices of products such as toor, chana, kapaas (unginned raw seed cotton), soybeans, etc. wholesale markets fall below their government-declared PSM. Active supply stops once wholesale prices cross the MSP. For example, for the current campaign, NAFED had started buying soybeans, but the operation ended as soon as mandi prices crossed the MSP.

Purchasing process

Once the procurement target (typically 25% of final yield) is declared, sub-agencies are asked to activate ground operations. In the case of NAFED, the actual purchase is made through village marketing cooperatives; CCI itself purchases from farmers in designated centers.

Farmers who wish to sell their products in the centers must register using their land documents, seedling certificates issued by the village level revenue officer, Aadhaar, PAN and their bank details. Once the registration has been made, the farmer receives an SMS indicating the probable date of supply.

The farmer is expected to bring his produce to the designated center on the designated day. The payment is usually transferred to the farmer’s bank account within a few days.

APMC, arhtiyas, traders

Before MahaFPC, the apex body of the state’s agricultural producer societies (FPC), came into the picture in 2014, purchases of pulses and oilseeds were done in mandis. MahaFPC channeled the supply to the village level, acting through the member FPCs.

In the case of CCIs, the Agricultural Product Market Committees (APMC) certify the farmer’s credentials and actual delivery takes place to designated processing units, which are mostly located near the APMCs.

In both cases, the role of APMCs is limited and arhtiyas / traders have no involvement in the formal procurement process.

Field agencies such as cooperative unions or FPCs that actually do procurement charge very low service fees, but APMCs do not impose any taxes on public procurement. Thus, the financial stakes for the mandis, the arhtiyas or the traders in the wake are almost non-existent. In fact, government markets are more the exception than the norm for the majority of farmers in the state.

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Seed potential

Land records and tax documents are essential to validate the farmer’s claim on the crop, and bank details help track the movement of funds. In the case of NAFED-led procurement, NAFED pays the sub-agents, who transfer the money to the field agencies who, in turn, remit it to the farmers in their accounts.

Procurement involves registration, delivery, and payment, and takes some time. While CCI centers open after October for the supply of kapaas, the supply of oilseeds is often delayed, for reasons ranging from delays in decision-making to lack of ground-level infrastructure to bring implement procurement. There were discussions on the need for MahaFPC to intervene where the intervention of cooperative organizations has not been effective.

A few years ago, when bumper toor crops collapsed in the markets, many farmers suffered because they did not receive the SMS asking them to bring their produce to the markets.

Other examples

The best example of another predominantly online procurement system is that of sugar.

Farmers register their cane with mills well in advance, allowing mills to establish a harvest schedule. Given the scale of payments involved, factories in Maharashtra have long relied on bank transfers using NEFT, RTGS, etc.

Cane producers, unlike those of other crops, are assured of a fair and remunerative price (FRP) declared by the government and the mills must produce payment statements to the sugar commissioner. Non-payment can prompt action against factories.


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