The CACP recommendations on Minimum Support Prices (MSP) for the mandated six Rabi crops — wheat, barley, gram, lentil, rapeseed and mustard, and safflower — are arrived by considering several factors.

These include the cost of production, supply and demand situation of various crops in domestic and global markets, domestic and world prices along with trade opportunities, terms of trade between agriculture and non-agriculture sector, optimal utilisation of land, water and other production resources, likely effect of price policy on rest of the economy, and a minimum of 50 per cent mark-up over the cost of production.

Though on the surface the list looks comprehensive, there are two missing concerns given the present day challenges, necessitating a change in the MSP formula.

Acreage and water use

There is ample data-based evidence to show the causal relation between acreage and MSP movements. Rising MSPs of water-intensive crops has resulted in some of the water conflicts over river basins as shown by recent studies in the Cauvery and the Teesta river basins.

This is also because MSP for rice and wheat, where government agencies like Food Corporation of India play a role in procurement, has created a reference for market prices. Ever since the MSP was introduced in the late 1970s, it became the “floor” price-setter for rice and wheat.

Between 1980 and 2000, the MSPs of rice and wheat increased at a much faster rate than those of the “coarse” cereals (like jowar, bajra and ragi) which eventually led to movement of the terms-of-trade (defined as ratio of prices of competing crops, e.g. rice and millets) in favour of the water-consuming cereals.

This led to acreages moving largely in favour of water consuming staples, whose crop-water requirements are many times of that of the drier millets. In the case of Cauvery and Teesta, the introduction of dry season paddy and its expansion created reliance on irrigation thereby fuelling demand for water.

Though the MSP formula claims to take into account land and water use, it needs to be noted here that there is a need for Rabi millets (e.g ragi) to be promoted through MSPs. This is because the millets are less water-consuming as compared to many other alternatives including wheat. However, there does not seem to be any MSP announced for Rabi millets.

In the process, it will be crucial to take into consideration the estimates of irrigation water needs for specific crops, redefine the Rabi basket by including millets, and declare a higher MSP for less water-consuming crops vis-à-vis the high water consuming crops.

Interestingly, both paddy and ragi are included in the Kharif basket by the CACP, though both are produced during the Rabi as also the summer, thereby being fully irrigated during these seasons.

Nutritional Security

The other consideration that is missing from the MSP formula is the consideration of the nutritional security. Ideally, the MSP regime should remunerate those crops that have a higher nutritional value per unit of resource use (see table).

It is clear from the table (an outcome of an ORF research), that ragi is the most efficient water user in producing calories. Bajra followed by wheat and ragi are the better performers in terms of water efficiency in producing iron. For the case of fibre, ragi is the most water efficient crop followed by barley and maize demonstrating the same water efficiency.

Maize is the most efficient water user in producing carbohydrates with ragi being second and wheat third. With reference to fat production, bajra takes the first position followed by ragi and wheat. Ragi is the best performer in the case of calcium production. Wheat and ragi do equally well with phosphorus production per unit of water at the margin.

However, so far, the MSP formula has not taken into consideration the health and the nutritional aspect. Irrespective of the season, the nutritional aspect needs to be figured into the MSP recommendations, and more nutritional crops should command higher support prices.

In this case, though we find a clear bias towards wheat, it is amply clear that the MSP must also needs to support ragi, when viewed from a nutritional security perspective.

The writer is a Director at the Observer Research Foundation, and President of the Indian Society for Ecological Economics

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