Friday, June 9, 2023

Minimum support price helps to incentivize agriculture and farmer


By Muneer Shamee

Minimum support price is an important Indian agricultural policy which helps to incentivize farmers and ensures adequate food grains production in the country. Since the implementation of Farm Bill 2020, there has been perception of major threat of farmers that are loosing their support price. Indian agriculture is mainly dependent on nature. Our farmers has to face many hurdles in order to grow agricultural products. Uneven rainfall causing floods, droughts, snowfall, farmers loan are the main reasons of farmers trouble. When ever they grow little or surplus crops they get minimum benefits leading them to suicide. The Minimum Support Price is the price at which government buys food grains from farmers as per recommendations of the Commission for Agricultural Costs and Prices  (CACP). If the farmer gets more price of the MSP they can sell with their utmost profit. The MSP is less than market price and greater than procurement price of commodity so that farmer gets good price of commodity.

Factors Determinants of MSP

Government of our country taking cognizance of the situation helps the farmers by means of MSP. There are various factors considering MSP –

*  Demand and Supply

*  Cost of Production.

*  Comparing prices of domestic as well

    as international.

*  Terms of trade between agriculture

    and non-agricultural.

There are various ways of determining the MSP. First of all CACP visits to the different states for the spot assessment of food grains which are ultimately sent to government for implementation by Cabinet Committee on Cabinet Affairs (CCEA). Food Corporation of India (FCI) buys it and stores for future use. Central Government of India fixes MSP’s of 25 essential commodities which comprises 7 cereals ( paddy, wheat, maize, sorghum, pearl millet, barley and ragi), 5 pulses ( grain, tur, moong, urad, lentil), 8 oilseeds ( groundnut, rapeseed, mustard, soyabean, seasmum, sunflower, safflower, Tori’s, nigerseed) and 5 commercial crops ( copra, sugarcane, cotton, raw jute and vfc tobacco).

Economy of country depends on demand and supply of the product. When the supply of commodity increases, the price slashes down and when the supply is less than the requirement the prices soars up. Procurement price will be announced after the harvest higher than the MSP, but lower than the market price. Sufficient renumerations to the farmers, providing food grains, supports our food security programme through PDS and other programmes. In the hour of crisis like flood, drought, war or other natural catastrophe these food grains help in procurement of necessary food items.

Objectives of MSP

Protecting farmer from loss or theft, when the price of agricultural goods is slashed down and farmer protest in support of their product then the MSP is essential. Second objectives of MSP is to support Public Distribution System for public welfare and preserve agricultural goods. This enables the farmers to sell the goods at MSP. There has been uncertainty in the agricultural production so it helps in increasing production of commodities in general. The CACP takes into account of production, what are the trends in market prices, demands and supply of required goods, international price situation, and in comparison between the paid prices received by farmers which helps in implications for subsidy, to improve the agricultural products, it’s production, distribution and procurement of essential crops. From 2009 to 2013 there has been 19.3 % increase in MSP but from 2014 to 2017 it is reduced to 3.6% .

There has been dearth of FCI Godowns and lack of markets for poor farmers that enables them to sell their crops. The MSP centres are far away from village as it becomes difficult for the farmers to reach these centres. The MSP is less than market place and greater than procurement price of commodity so that farmer get good price and sell their products at higher rate. In the Mandi the middleman used to buy these crops at a lower rate and sell them at higher rate. Several times farmers failed to get their price at MSP so that there has been increase in farmers protest or suicide. MSP should be implemented at MS Swaminathan report. Various crops which are outside the MSP they must be monitored and various encouraging efforts should be regulated at regular intervals. There has  been demands of bringing Potato and Onion at MSP. The slogan of ‘Jai Jawan, jai Kishan’ should have practical implementation. We must pay heed to the suiciding farmers. On every 3 minutes farmers suicide. They failed to get back their loans and loan repayments and various problems related to agriculture. MSP is a good initiative to improve farming and major drawbacks should be effectively managed.

(The author is a columnist. The views expressed are personal opinion of the author. He can be reached at [email protected])

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