In announcing the minimum support prices for the kharif season, the Centre has rightly stuck to its plan of trying to wean away acreage from rice, particularly in rainfed areas, to pulses and oilseeds. This has been its policy since 2015, and it has resulted in output gains and increased acreage in pulses, the production of which has crossed 25 million tonnes (27 million tonnes in 2021-22), against 16-17 million tonnes about seven years back (a 50 per cent rise). It is perhaps as a result of price signalling through MSP that the production of oilseeds has grown from 25 million tonnes in 2015-16 to 37 million tonnes in the last fiscal. This year, soyabean and jowar hybrid have led the MSP spike (at 8-9 per cent) while the raise for paddy is about 5 per cent. Any dilution of this trend would slow down the desired shift towards less water intensive crops, which brings with it the attendant benefits of reduced import dependency in pulses and oilseeds. However, for price signalling through MSP to work, the pulses and oilseeds crops must get the announced prices. At present, that is not happening. Prices of tur/arhar are ranging between ₹5,700-6,100 in various markets of Maharashtra and Karnataka, much below the MSP of ₹6,300 for 2021-22 and ₹6,600 for this season. Similarly, prices of moong/green gram are ruling around ₹6,000 per quintal levels as compared to MSP of ₹7,755 for FY23 .
India’s price support operations through procurement have effectively been restricted to rice, wheat and cotton rather than the 23 crops for which MSP is announced. There is scope to enhance procurement of millets and pulses — not just to support growers but also to improve the nutritional intake of the masses by distributing these through the PDS. In this regard, the performance of NAFED, the agency concerned, has been underwhelming. Its capacity in terms of human resources, infrastructure (coordination with APMCs and warehouses) and finances should be enhanced, notwithstanding the vested political interests at work in agri trade. A plan to procure a certain quantity should be decided in advance by the Centre and States, based on output estimates, so that States are equipped to deal with a good crop. The other issue in most States, barring Punjab and Haryana, is delayed procurement and payments. In the case of pulses and oilseeds growers, many of whom are small and marginal farmers in rainfed regions of peninsular India, this leads to distress sales.
While procurement operations should be diversified across crops and geographies, open ended procurement, fiscally and logistically speaking, is not feasible. Other price support systems should be implemented. For instance, the MSP can serve as a floor price, with the farmers being compensated for the difference between it and the prevailing market price as is the case under the Centre’s Price Deficiency Payment Scheme. The latest kharif price report of the CACP has mooted procuring paddy without limit only from small and marginal farmers — a worthwhile initiative, provided the infrastructure is created for this task. It has suggested linking farmers to commodity derivative markets, using put options, with NABARD, NAFED and other agencies training FPOs to this end. Finally, export curbs and bottlenecks on inter-State movement of grains act against farmers’ interests. MSP is no magic bullet; farm marketing needs deeper reforms.