What is the MSP? Why was it introduced?
MSP is the minimum support price. It was first introduced in the 1965-66 crop year (July-June) for wheat, and it now covers 23 crops. It is announced weeks before the Kharif and Rabi planting seasons. It was introduced as an incentive for farmers to grow food crops when India faced a shortage of food grains. Government agencies such as the Food Corporation of India use the MSP to purchase wheat and paddy for the central pool. In the case of maize, cotton, pulses and oilseeds, the Center steps in to procure them when their prices are well below the MSP and farmers resort to distress selling.
In recent years, the goal of the MSP has been to encourage farmers to grow nutrients, oilseeds and pulses rather than wheat or rice. The reason is that India has mountains of food grains while spending a considerable amount of foreign exchange on the import of edible oils and pulses. Last oil year (October 2020-September 2021) India spent 1.17 lakh crore to import edible oils to meet domestic demand.
Do all farmers benefit from PSM?
No, not all farmers benefit from PSM. During the monsoon session, the government told parliament that just over 14 percent of owner farmers benefited from MSP. He set the number of MSP beneficiaries at 2.1 crores in 2020-21.
Even for paddy and wheat, the main products purchased under the Centre’s MSP program, not all farmers in the country benefit. For example, the MSP for maize is 1,870 per cwt this season, but in most growing centers the prices are lower. Likewise, MSP for rice and wheat is only achieved when farmers sell their produce to government procurement agencies.
But there are also examples of crops far superior to PSM. Prices for cotton, oilseeds and pulses were higher than those of the MSP. In the case of cotton and oilseeds such as soybeans, prices have reached record highs in line with world market trends.
Why is MSP in the news today?
The MSP is currently in the news as part of the farmers, who protested against the agricultural reform laws passed by parliament in September last year, demanded a legal guarantee. They have now made it their main demand to withdraw their protest after Prime Minister Narendra Modi announced the repeal of agricultural laws. The bill to repeal agricultural laws was approved by Lok Sabha on the opening day of the winter session on Monday. Farmers are demanding a legal guarantee as some opposition parties have raised concerns that the goal of agricultural reforms is to end the MSP system. The Center has repeatedly made it clear that it has no such intention. Over the past two years, he has made record purchases of rice and wheat from the MSP, which farmers refuse to watch.
A legal framework for the MSP, a statutory MSP, will he solve all the ills that afflict the agricultural sector?
No, remunerative price or PSM is only part of the problems that farmers face. Farmers face many other issues other than price, which itself is not guaranteed given the influence of politicians and cartels in mandis. They lack information on what crop to grow, when to sow, apply plant nutrients and what pest is attacking their crop. Farmers also lack post-harvest technologies to ensure a better shelf life for their produce. In addition, they do not have adequate facilities to irrigate their land, with almost 50 percent of the land being rain-fed and lacking large warehouses to store their produce at the village level, in addition to proper roads to link them to the village. mandis.
Legal support from the MSP could also pose the danger of trade moving away from places where the law is vigorously enforced. For example, when the Punjab said it would make the MSP legal and binding, wheat traders said they would keep the state out to avoid problems for themselves.
How are the cultures outside the MSP doing?
Vegetables, fruits, flowers, spices and plantation crops are among the crops not covered by the MSP. Their prices fluctuate based on seasonal demand and supply. These crops are also more vulnerable to climate change such as floods and droughts. However, farmers have increased their production every year.
Interestingly, the Center set a fair and remunerative price (FRP) for sugar cane with provisions for states to set a higher price called the state recommended price. So far, sugar cane producers have been paid without fail, although their contributions are delayed. In the last two seasons (October 2019-September 2021), the Center has spent over 10,000 crore yen on sugar export incentives so that farmers’ dues are paid quickly.