A recent article in this paper had a misconstrued interpretation of farmers’ demand for a guaranteed MSP, saying it will claim half the Budget. The Prime Minister continues to rant that the “MSP has remained, and will remain” and that the government is willing to “give a written assurance” of this. The media, especially the visual ones, largely engage with the merit of the offers from the government and not with the merits of the demands.
The demand for a guaranteed remunerative Minimum Support Price is not about government procuring products from every farmer in the country at the MSP. It is indeed preposterous to think so. It is about reinstating the MSP as the bottom price for all agriculture produce through an Act, so that farmers are able to realise at least this minimum price, whoever buys the product. This means even as the government agencies continue to remunerate the farmers at the MSP, the private sector would also have to do the same. Farmers will have a right to the MSP, even as they continue to enjoy the freedom to sell anywhere. This eventually would protect the farmers from incurring losses. It would increase incomes and the “Doubling Farmers Income” goal can be achieved with much less spending.
The present spending on food procurements and the food subsidy need not be increased more than is necessary. For instance, the annual turnover cost, as per 2019-20 revised estimates for the FCI, comes to around ₹1.74-lakh crore with ₹1.39-lakh crore being the subsidy. The rest of the cost of the MSP payments would become the responsibility of the private buyers.
Would the private sector be willing to pay MSP?
The corporate world has welcomed the three farm laws and reiterated that it would benefit the farmer by higher incomes. The government also claims the same. But it is not willing to legalise and institutionalise the only instrument that can guarantee this higher income, the MSP. Instead, the government, by way of just rhetoric, is hoping the private sector will ensure better market access. Even if so, market access does not mean better prices. In fact, studies show that farmers in States with MSP procurements and APMC controlled mandis realise better prices than in States like Bihar, which did away with the APMC. A free open market is a traders’ delight but can never be a farmers’ choice, if it cannot guarantee remunerative prices. Hence, along with the MSP guarantee law, the government will have to engage with the agri-business corporates and traders to encourage them into the process.
It will also have to set up stand-by mechanisms to intervene in the market when traders show reluctance to buy. Kerala for instance, has announced base prices for 16 vegetables, fruits and tuber crops, though it does not procure them. Still it has allocated ₹35 crore as a market intervention fund, in case they have to procure or compensate, to intervene in a price crash situation. Similarly, post the Indo-Asean agreement, the price of rubber fell drastically, and Kerala has now a budget head with an allocation to compensate the farmers for price loss.
Moving on to the PM’s commitment to status quo on MSP, it is not convincing to be told that these Acts do not impact MSP. The PM has also made statements showing how they have announced higher MSP rates than during the UPA. For instance, he claims that MSP for wheat, paddy and jowar during the UPA was ₹1,400, ₹1,310 and ₹1,520 respectively for a quintal, but it is now ₹1,975, ₹1,870 and ₹2,640 now. However, the rates of increase during these periods do not justify these claims.
The more pertinent question is, how many farmers, from among the 14 crore in India, actually benefit from the MSPs announced? According to the Shantha Kumar Committee on restructuring FCI, only 6 per cent of the farmers benefit from procurement. This figure is outdated after decentralised procurement that now covers 23 States for paddy and 10 States for wheat, out of which 10 States for paddy and five for wheat contribute significantly. Still the number of farmers realising MSP rates is between 15-25 per cent.
This means most of India’s farmers have to sell their produce at much lesser prices, dictated by the markets. An increase in MSPs or the commitment for “MSP status quo” is of no value at all to the farmers, as long as they are not able to sell at that rate or above. This is why they are demanding the “legal right of every farmer” to realise MSPs for their produce. This way they can end the loot by the markets. In short, “One India, One Market” works for them only if government can commit a “ One India One Price”, and that is the legally assured MSP.
The writer is with ASHA-Kisan Swaraj and is Coordinator of the Save our Rice Campaign-India