MSP hike ‘below the recommended level’

The Cabinet announcement hiking Minimum Support Prices for crops is “a welcome first step” in tackling the agrarian crisis but falls short of the recommended C2+50 per cent, according to MS Swaminathan who headed the National Commission on Farmers constituted to tackle the agrarian crisis.

The report submitted by the Commission in 2006, had, among various recommendations, called for giving farmers an MSP of cost+50 per cent with cost calculated on C2 basis, as categorised by the Commission for Agricultural Costs and Prices.

C2 essentially includes the imputed cost of capital and rent for land cultivated.

Swaminathan said in a statement that the higher support prices are a recognition of the economic problems of farmers. The “MSP announced today is higher in absolute terms but below the recommended level.”

For example, the MSP of common variety of paddy has been hiked to ₹1,750 a quintal from ₹1,550 last year. Taking the C2 cost of 2017-18 and assuming a 3.6 per cent rise in input costs based on the CACP index, the estimated C2 cost for 2018-19 is ₹ 1,524. So the new MSP is actually only C2+15 per cent for paddy.

Similarly, for ragi it is C2+20 per cent and for moong, for which the MSP has been raised to ₹6,975 from ₹5,575, earlier, it is C2+19 per cent, he said in the statement.

Procurement efficiency

He said in terms of marketing, in addition to the support price, a favourable procurement policy that ensures farmers get the MSP and measures to increase consumption through effective implementation of the Food Security Act, and school noon meal scheme programme should be integrated.

Swaminathan said, except for wheat and rice, there is inadequate public procurement at MSP. The case of pulses farmers who depended on procurement makes this clear. They were let down by the crash in market prices.

For many crops such as maize, groundnut, soyabean, bajra, rapeseed and mustard the weighted average mandi price was below the corresponding MSP before the monsoon.

Farm risk high

To improve the income stability and total income from farming, the National Commission had also recommended a number of measures including controlling over exploitation of ground water and other eco-destructive activities.

The monsoon and the market play an important role in profitability and stability of income in agriculture. Though the government has taken steps to improve crop insurance the coverage and performance are “still far from satisfactory”.

The risks are still high leading to demand for higher prices and credit reform. He pointed out that the two main demands of farmers’ movements are loan waiver and remunerative prices.