MSP Scheme for Minor Forest Produce: Major Issues

Minimum Support Price Scheme (MSP) for Minor Forest Produce (MFP) is a centrally-sponsored scheme launched at the end of 2013-14 (during the 12th five-year plan) to assure fair and remunerative price to MFP gatherers. Known as ‘Mechanism for marketing of Minor Forest Produce (MFP) through Minimum Support Price (MSP) and development of value chain for MFP’, the scheme was planned as a social safety initiative for MFP gatherers.

Why the scheme was launched?

• A Planning Commission report had observed that Minor Forest Produce (MFP) adds to 20 to 40 per cent of the income of forest-dependent communities, particularly the landless with a prevalent population of tribals, and gives crucial subsistence during lean seasons.
• However, the MFP economy is also known to be affected by unorganised and uncertain market demands, lack of proper storage facility and logistics, thus negatively impacting economic returns to these communities.

What are the objectives of the scheme?

• To provide the fair price to the MFP gatherers for the produce collected by them and improve their income level
• To guarantee sustainable harvesting of MFPs.
• The MSP scheme aims at creating a framework to ensure fair returns for the produce gathered by tribals, assurance of buying at a certain price, primary processing, storage, transportation etc while assuring sustainability of the resource base.

What are the salient features?

• With respect to the guidelines issued for the implementation of the scheme, the Centre needs to give 75 % of the working capital in the form of revolving funds in the first two years and share losses, if any, in the ratio of 75:25 between the Centre and the state.
• Earlier, the scheme was extended only to Scheduled Areas in eight states and fixed MSPs for 12 MFPs. Later expanded to all states and UTs.
• The scheme also focusses on the development of a value chain for MFPs, such as the establishment of cold storage facilities, warehouses, processing units and modernisation of haats (markets).

How is it significant?

• This activity has the strong connection to women’s financial empowerment since most of the MFPs are harvested and used or sold by women.
• With MFP sector, it is possible to create about 10 million workdays of jobs annually across the country.
• The scheme, in spite of its poor outreach, had started to show visible benefits in creating the negotiating power of the tribal communities for fair prices for their MFPs.
• The scheme was not only facilitating tribal communities (particularly women) to earn much better returns for their MFPs, but also creating their collective bargaining and negotiating power with private traders.

What are the Concerns about the implementation?

Even though the Scheme was launched in 2014, it had a mixed result for several factors. Some states did well but in many other States the Scheme is yet to be launched

In October 2016, the Ministry of Tribal Affairs (MoTA) revised the guidelines for the scheme.

• On one hand, the scheme was expanded to all the states of India and integrated another 14 MFPs to the list eligible for MSP. On the other hand, the guidelines heavily reduced the MSP for crucial MFPs like chironji (Buchanania lanzan), tamarind, mahua seeds (Madhuca longifolia), and karanj seeds (Millettia pinnata)
• While it has enabled the states to increase the new rates by up to 10 per cent, it has also put the restriction that any losses happened in the process would be entirely borne by the state governments.
• The revised guidelines also provide states with a free hand to entirely stop the scheme by suspending the process of procurement or not to do procurement of MFP at all.
• The revised guidelines have also deterred construction of storage facilities and warehouses.
• The reductions will negatively impact what the communities had managed to achieve—good economic returns from MFPs and bargaining power with private traders.

Has the MSP reduction justified?

• The rationale of the government in decreasing the MSP has been to reduce the losses to state governments.
• The Union Minister of Tribal Affairs said that the MSP in the 2014 guidelines had been fixed higher and states could not meet the costs.
• The government has also made it clear that it is not going to bear the losses happened in the MFP trade.
• Also at the national level, expenditure on the scheme has been less than 1/3rd of total allocation:
• Hence, even before the scheme could be effectively implemented and funds properly utilised, the government decided that MSPs should be reduced. This created serious doubts about the government’s aim.

Way forward

The MSP for MFP scheme has enormous potential to enhance livelihoods of forest-dependent communities and also will result in their economic empowerment. What the scheme requires is the encouragement and not setbacks. Regrettably, the revised guidelines have done the latter. Further, the State has to perform the role of an active player and not stay as a mere spectator. The Scheme has to be taken to the next level via value addition and synergy with the programmes of other departments and ministries as well.