The massive year-long protest against the farm laws were triggered as the farmers feared an end to the practice of the government announcing a minimum support price or MSP for various crops they produce. The protests continued even as the Modi government repeatedly clarified that it will not be withdrawn and in fact, increased procurement at MSP in the last 12 months.

Farmers have not been assuaged even after the farm laws were repealed. Now they want the government to give a legal backing to MSP. In other words, they are demanding a law where it is illegal for anyone to buy from farmers below MSP.

MSP was first announced in 1966-67. That was the time India was facing acute food scarcity and Green Revolution was taking roots. The government wanted farmers to plant new high-yielding varieties of wheat and paddy. To motivate them to do so, it began to offer a minimum price for the two crops.

Five decades later, India has not only become self-sufficient in food production but is struggling to manage the surplus. The system of MSP, however, continues and it has since been extended to 23 crops. In FY 21, there were 2.1 crore beneficiaries.

The fact that a policy started five decades earlier to tackle acute scarcity is still in great demand even after the nation has become a surplus producer of foodgrains speaks volumes about the state of Indian agriculture.

Noted agricultural scientist MS Swaminathan told this writer more than 15 years ago that farming was the riskiest profession in India. That remains true even today. Farmers continue to be at the mercy of nature — drought and floods and their occurrences have only increased due to climate change. Crop insurance has mitigated this risk only partially.

If it is not the fear of nature, it is the fear of not getting adequate prices that is forcing farmers to hang on to MSP. The chances of a farmer getting a remunerative price is far and few between. This is because the agricultural markets are imperfect. Middlemen form a cartel and beat the prices down as the farmers do not have multiple options to sell his produce. They are typically tied to the local mandi and inevitably, end up just about recovering their costs.

Farmers’ role

Farmers too are responsible for this situation. They have not modernised their farming practices. This keeps their costs high and yield low. There is no planning involved (based on demand-supply outlook) on what crop they will grow each season. It is either influenced by herd mentality or faulty government policies such as MSP (only reason paddy is grown in Punjab) or FRP (only reason sugarcane is grown in Tamil Nadu). Unplanned cultivation has resulted in huge surplus and poor realisation.

A large proportion of the farmers in the country have thus remained poor, often caught in a vicious debt trap with an unfortunate few taking their lives unable to bear the burden. Under the circumstances, MSP gives them something to hold on to and rumours of its possible removal got them really agitated.

But will a statutory MSP solve their problem? Unlikely. Reasons are many. One, it will act as a disincentive to the farmers from modernising their processes. Also, MSP is not universal in its coverage. It is not applicable to all crops but just 23 of them.

That apart, fruits, vegetables and livestock which account for 45 per cent of India’s agriculture, forestry and fishery output are not covered by it. Milk output which is more than the combined paddy and wheat production is also out of MSP. And where MSP is applicable, not all farmers benefit from it.

The Centre procures only eight crops at MSP and that too only in select regions across the country. In many parts of the nation, prices rule much below MSP for the 23 crops. One may argue that legal backing will tackle this problem but it will also open a Pandora’s box.

Experts have suggested that a statutory MSP can be implemented in two ways. One, by mandating that all purchases by farmers including by private players will have to happen above MSP. This will distort the market and drive away private players. The other option is by the government buying all the output. But it cannot do so for just 23 crops. Farmers growing other crops including milk producers will demand the same. Such a move is impractical and fiscally unmanageable.

The better way is to create conditions for the farmers to upgrade their process and earn more income. They should be free to sell their produce to anyone and escape from the clutches of the middlemen. They must be able to enter into contract farming with the buyers who will also help them to modernise. Mandis should compete with corporates so that farmers get a better deal.

‘Still born’ reforms

This is exactly what the three farm laws sought to achieve. But they arrived ‘still born’ more due to the Centre’s strategy. As experts have opined, top-down approach on the strength of brute majority in Parliament did not work. States were not taken into confidence (despite agriculture being a State subject) and a lot of ground work should have happened with the farmers before the law was introduced. Promulgating an Ordinance and then rushing the law through without much debate in Parliament only increased the suspicions in the minds of the farmers.

All is not lost. The Centre can ask the States to spearhead these reforms and incentivise them for it. A model law can be developed for them to follow, if need be apart from ensuring adequate resources for funding this transformation. The Centre must work to open up export markets for various agricultural commodities through trade deals and use MSP to drive crop diversification even strongly. In fact, it can start the reform process in BJP-ruled States.

Once the reform happens and farmers start earning more, those in other States will embrace it. Success, as they say, begets success. If that happens, MSP will remain just on paper and will come into play only under extraordinary situations.

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