Friends, as you all are aware FARMERS PROTEST 2.0 is presently going on, and farmers from Punjab, Haryana, and Western UP have started their march towards Delhi on 17th Feb 2024. The police in Haryana and Delhi have put massive security arrangements and sealed borders between Punjab and Haryana, and Haryana and Delhi so that the protestors can not hold Delhi to ransom. There are various demands, the major being the ‘legal guarantee of minimum support price (MSP) for all crops. Leading this farmers’ protest is ‘Sanyukt Kissan Morch (SKM)-non political. The bigger farmer leaders who had spearheaded the previous protests are in wait-and-watch mode.
Generally, the government sets the MSP for nearly two dozen commodities twice a year on the recommendations of the earlier Commission for Agricultural Costs and Prices. Most of the crop procurement under MSP is from Punjab and Haryana, and of wheat and rice produce which supports the government’s public distribution system. The protesting farmers want a law that guarantees MSP on every crop. However, the government is reluctant to do so because of various concerns such as global prices, pressure on the government for procurement, export competitiveness, and other expenditures.
Another major demand is to implement the recommendations of the MS Swaminathan committee. MS Swaminathan, who is known as the father of the green revolution in the country, has been recently honoured with Bharat Ratna. His committee’s main recommendation was to increase MSP to at least 50% above the weighted average cost of production.
Now MSP is the price at which the government buys crops from the farmers, providing them with assured income for their product. This price acts as a safety net for farmers, during market price fluctuations. As per the latest information rice and wheat farmers received nearly 18 lakh crore as MSP in the last decade starting from 2014, which was 2.5 times more than in earlier decade. Farmers producing oil seeds and pulses received over 1.25 lakh crore as MSP in the same period.
Now of the 23 crops that the government currently announces MSPs for every year, there are seven cereals (rice, wheat, maize, bajra, jowaar, ragi, and barley, five pulses (chana, arhar, moong, urad, and masoor), seven oilseeds (groundnut, soybean, rapeseed-mustard, sesame, sunflower, niger seed, and safflower), and four commercial crops (sugarcane, cotton, copra, and jute). However MSP is announced for all crops, it works mostly for rice and wheat only, because the government has a vast storage system for only these grains which feed the government’s public distribution system. The govt often ends up buying twice the amount needed for buffer stock. There have been concerns over grain rotting in FCI storage facilities.
Now issue with an MSP Law- it will force the government to buy as much as farmers produce of 23 crops for which MSP exists. The law will enforce open-ended buying at the declared MSP, which may not be in the interest of farmers or society, in general. It might lead to wastage of scarce resources, failed cropping patterns, discrimination between farmers who grow supported and who grow other crops, lawsuits, payment arrears, and other problems. The government will face multiple concerns over a legal guarantee for MSP crops such as global prices and others, as mentioned earlier. If MSP gets legal sanction, there is fear that the country’s agricultural exports could become non-competitive. MSP for most crops could become higher than the rate in the domestic and international markets, which is why it is not possible to force private traders to buy at MSP rates.
Many experts think MSP would be a huge mistake. What the country needs is to find a way to protect farm incomes, and not to lock in place farm prices. It needs to allow farmers to make choices based on the market signals on prices while protecting them. The way to do that is to assure them direct income support. MSPs were useful in ushering green revolution but can become wasteful and inefficient in the long run. In the case of rice and wheat cultivation that ended up in massive stocks at huge costs, at FCI’s godowns. Today country holds more than twice as much cereal stocks compared to its needs at a very high cost. Large increases in paddy (rice) cultivation also resulted in excessive water use, and free electricity meant the water table in rice-growing fields was depleted.
As per experts, our country now should shift away from wheat and rice, and grow more oilseeds, lentils, fruit, and vegetables where we have large shortfalls. India now needs a second green revolution in commodities other than rice, wheat, and other cereals.
The experts say that the other option the government can also consider is paying the price difference between the MSP and the rate at which the farmers sell. Haryana and MP have tried this option under a scheme called Bhavantar Bharpai Yojana (price-difference compensation scheme). In this scheme, farmers get money if they have to sell their produce in the open market below MSP, but there were some flaws/loopholes in this scheme, this scheme could be an alternative to MSP law if the flaws can be corrected.
Let us wait and watch about the future developments on this issue.
Waiting for your views on this blog.
Anil Malik
Mumbai, India
14th February 2024