Minimum Support Price or MSP is one of the most important components in the Indian agriculture system. The reason for this is that it is a fact that in most cases the farmers do not get a fair price for their produce. The minimum support price was arranged in the 60s when India was not self-sufficient in food grains and had to import grains. Then some steps were taken to encourage the farmers. First, high-yielding varieties, called dwarf varieties, developed at the institute by Nobel Prize-winning agricultural scientist Norman Borlaug, were adapted to India and used, leading to the Green Revolution.
Along with this, the minimum support price for wheat was also fixed. Along with this, Food Corporation of India and government procurement arrangements were made. As a result of that, India’s food grain production which was 50 million tonnes at the time of independence, has now crossed 300 million tonnes. Today India is exporting food grains. There were some restrictions in the last financial year, but before that India had become the largest exporter of rice in the world. About 42 percent of the market rice was exported by India. Wheat was also exported.
A very big role in this is to guarantee the farmers to get a fixed price for their crops, that is, the price that they know in advance. Gradually this system was implemented for 23 crops. These include food grains like paddy and wheat, coarse cereals like jowar, bajra, maize, ragi, oilseeds and pulse crops like arhar, urad, moong, lentil, gram. Apart from these, MSP is also fixed for crops like cotton, sugarcane, copra and jute. But, the purchase of food grains continued to increase. Now it has become a common thing that farmers demand better price for their crops every time and there have been agitations regarding this. During the UPA government, the National Farmers Commission, headed by Dr. MS Swaminathan, had given its report that farmers should be given 50 percent more than their cost under MSP.
The central government announces the MSP on the basis of the recommendation of the Commission for Agricultural Costs and Prices. For this, the commission seeks cost figures from the states and then suggests a price based on its formula. However, many times a price higher or lower than their suggestion is also announced. But, the farmer remains dissatisfied after this announcement. For the last ten years, they have been demanding that MSP should be given 50 percent more than their cost.
It has also become a political issue as the Bharatiya Janata Party-led NDA government, which won the 2014 elections, promised to implement the recommendations of the Swaminathan Committee, but it could not be fulfilled. In the year 2019, before the elections, the government tried to move forward in this direction, but the differences continued. The MSP that is available now is mainly available for food grains like wheat and paddy. There is a separate system for sugarcane and cotton. The central government and FCI buy food grains in coordination with the state governments, but there is a problem with other crops. Sugarcane is bought by sugar mills. Cotton is procured by the Cotton Corporation of India. Then, the cooperative sector’s NAFED has been authorized by the government to procure pulses and oilseeds.
But it has been seen that even in the case of food grains, this system is limited to some states like Punjab, Haryana, some parts of UP, Madhya Pradesh, Chhattisgarh, Telangana and Rajasthan. So the question often arises whether the farmers are getting the right price for those 23 crops or not. Also, farmers also say that these prices are low. So if we talk about the last few years, there is a movement going on regarding the formula for fixing the MSP. After the farmer’s movement, the government formed a committee in this regard, but even after almost a year, no conclusion has come out of it. That is, it has always been an electoral and political issue, but it is an issue closely related to the economic condition of the farmers and their source of income.
Differences regarding the cost of the farmer is a big issue. There are two ways of calculating it. Family labor is also added to the cost of all items in one. The government says that it is paying 50 per cent of this cost. Farmers say that the Swaminathan Committee, in its recommendation, had talked about giving a price above 50 percent of the overall cost, in which the cost of some other items was also added. According to their calculations, farmer organizations tell how much loss they are facing. A similar reaction came to the fore after the MSP announced this year. Another problem can be gauged from the recent farmers’ agitation in Haryana regarding the MSP of sunflower.
The demand of the farmers was that the MSP declared by the government last year should be given first. Now this year the government has increased the MSP of sunflower. But the question is that when they are not getting the declared price of last year itself, then what is the use of the newly increased price. In such a situation, increasing the MSP remains just a paper issue. A big problem regarding MSP is that the government increases the MSP of the crops, but only three-four crops are procured, for the remaining crops the farmer has to depend on the market. In the last few years, due to the increase in the prices of oil, labour, irrigation, fertilizers and pesticides, the cost of farmers has increased a lot. In such a situation, the net income of the farmer has decreased. Governments should think seriously about this and implement it in a practical way. If all the crops are procured properly, then it is possible that the farmer may not depend on only two-three main crops. It is important to note one more thing that this is also an issue related to food security and you can achieve it only when you keep the farmers satisfied.
(based on conversation)
(These are the personal views of the author.)
