A
Apoorva Devanshi
Guest
After having repealed the three farm laws, the leaders of Farmer unions have been calling government to legalise the Minimum Support Price(MSP). It is the minimum floor price at which the government procures crops from farmers. Currently, MSP is notified for 23 crops but the procurement is done for wheat and rice as it meets the needs of public distribution system.
MSP began in 1960, when India was a food grain scarce nation dependent upon third grade U.S wheat imports. Today we things have changed yet farmers are protesting and demanding legalisation of MSP. Before we get into that aspect, is MSP really a good solution?
First and foremost, farmers benefit from the Minimum Support Price (MSP) only when it surpasses the market clearance price and when the government actually purchases the produce. Now if the government legalises MSP on all the 23 crops then everyone would want to sell to the government only! But it is just not possible for the government to procure the entire produce of all crops. Presumably, even if it does procure then where will it sell or use it? Where will it store? Will it distribute for free? If the MSP is guaranteed for all produce then it would account for around 16 lakh crores which is more than a third of our annual budget!
The government’s role is to regulate not trade. Infact, the government has no business to be in business. Thus, the demand for Legalisation of MSP is non sensical and impractical.
The current farmer protest with their demand for legalisation of MSP is mainly politically fueled. As MSP has since ages have been a source of sanctioned loot. This is because the MSP based procurement system works on the dependence of middlemen and the red tapism of APMC.
According to Economist SS Johl, ” I am seeing political motive behind these protests, not farmer interest. What is the meaning of the statements such as “Modi nu thalle leyana hai (Modi needs to be brought down)”? Where is the interest of farmers in bringing (PM Narendra) Modi’s graph down? Some union leaders are playing politics under the garb of being farmers. By doing so, they are actually harming interest of farmers.”
All in all, the demand for legalisation of MSP is illogical. Instead of providing MSP for all crops across all states the government should provide it only on those crops which are essential for food security. We should develop an income support system and involve the private sector in agricultural reforms.
The post Should MSP Be Legalised? appeared first on The Jaipur Dialogues.
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MSP began in 1960, when India was a food grain scarce nation dependent upon third grade U.S wheat imports. Today we things have changed yet farmers are protesting and demanding legalisation of MSP. Before we get into that aspect, is MSP really a good solution?
Problems Associated With MSP Regime..
Limited Reach-
- According to NSSO’s SAS, there are about 9 crore farmers in India yet the beneficiaries of MSP only 6%. Food grain procurement is mostly concentrated around few states. For example, 85% of the Wheat procured in the country comes from Madhya Pradesh, Punjab, and Haryana which account for 46% of the wheat produced in the country. Similarly, 6 states that produce 40% of the country’s rice—Punjab, Telangana, Andhra Pradesh, Chhattisgarh, Odisha, and Haryana—account for 74% of procurement. Then only 24% of total Paddy produced in the country and 20% of the Wheat produced are sold under MSP. Furthermore, under the MSP, only 19% of farmer families sold paddy, while only 9.7% of wheat farmers benefitted from MSP.
Skewed Cropping pattern-
- Even though MSP is announced for 23 crops, but mostly Wheat and Rice are procured under National Food Security Act. The implementation of MSP for the rest of the crops is ad-hoc and insignificant. Thus, implying that majority of the farmers growing non target crops do not benefit from MSP. Then since wheat and rice have the highest share in MSP, farmers choose to produce them. This distorts cropping patterns for e.g. despite shift in consumption patterns from cereals to protein rich foods there is no significant shift in production pattern. India despite being largest producer and consumer of Pulses in the world, imported 3 mt of pulses in 2023.
- This skewed cropping pattern has ecological, economical and nutritional implications. It also negatively affects the income potential of farmers who can earn more by diversification.
Environmental Concerns-
- The farmers produce more of those crops which get more MSP (Wheat and Rice). This not only erodes crop diversity which is essential for food security but also leads to soil degradation. The excessive use of chemicals and reliance on monoculture will lead to loss of soil health, wastage of water resources and destruction of pollinators. In other words, it is harms environment and the farmers in the long run.
Storage Issues-
- The government has to shoulder a significant financial cost in procuring and maintaining buffer stocks of MSP-supported crops. This results in diversion of resources which could have been used for agricultural or rural development.
- Moreover, the government is following “Open Ended Procurement” Policy which means that it can’t choose how much to buy. Whatever amount of grains the farmers offer to the government it has to buy. As a result, the government currently possesses stock that nearly doubles the amount needed for PDS, buffer stock, and other government programs like the Midday Meal Scheme. The government procured 60 mt of food grains as opposed to 20 mt requirement. Since we have not involved private player in making state of art storage facilities and as FCI is already running under 3 lakh crores debt. Around 3500 metric tonnes of food grains go waste as they rot in FCI godowns every year.
Should MSP be Legalised?
First and foremost, farmers benefit from the Minimum Support Price (MSP) only when it surpasses the market clearance price and when the government actually purchases the produce. Now if the government legalises MSP on all the 23 crops then everyone would want to sell to the government only! But it is just not possible for the government to procure the entire produce of all crops. Presumably, even if it does procure then where will it sell or use it? Where will it store? Will it distribute for free? If the MSP is guaranteed for all produce then it would account for around 16 lakh crores which is more than a third of our annual budget!
The government’s role is to regulate not trade. Infact, the government has no business to be in business. Thus, the demand for Legalisation of MSP is non sensical and impractical.
The current farmer protest with their demand for legalisation of MSP is mainly politically fueled. As MSP has since ages have been a source of sanctioned loot. This is because the MSP based procurement system works on the dependence of middlemen and the red tapism of APMC.
According to Economist SS Johl, ” I am seeing political motive behind these protests, not farmer interest. What is the meaning of the statements such as “Modi nu thalle leyana hai (Modi needs to be brought down)”? Where is the interest of farmers in bringing (PM Narendra) Modi’s graph down? Some union leaders are playing politics under the garb of being farmers. By doing so, they are actually harming interest of farmers.”
All in all, the demand for legalisation of MSP is illogical. Instead of providing MSP for all crops across all states the government should provide it only on those crops which are essential for food security. We should develop an income support system and involve the private sector in agricultural reforms.
The post Should MSP Be Legalised? appeared first on The Jaipur Dialogues.
Continue reading...