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Farmers Protest 2024: Ensuring The Guarantee Of Minimum Support Price (MSP) – IMPRI Impact And Policy Research Institute

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Minimum Support Price (MSP) was first mooted in 1966-67, with the onset of the green revolution, to substantiate the Punjab farmers to use the dwarf ‘miracle’ wheat varieties that were imported from the International Centre for Maize and Wheat Research in Mexico (American-controlled) and then were cross-bred in India, primarily at the Indian Agricultural Research Institute in New Delhi. Soon MSP acted as a safety net for farmers that upside down the multitude of Indian agriculture from deficit to surplus. Initially, MSP for wheat was fixed at Rs 54 per quintal with the motive to incentivize farmers to grow wheat and paddy as they were the least lucrative and labor-intensive crops.

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Background

Minimum Support Price (MSP) was first mooted in 1966-67, with the onset of the green revolution, to substantiate the Punjab farmers to use the dwarf ‘miracle’ wheat varieties that were imported from the International Centre for Maize and Wheat Research in Mexico (American-controlled) and then were cross-bred in India, primarily at the Indian Agricultural Research Institute in New Delhi. Soon MSP acted as a safety net for farmers that upside down the multitude of Indian agriculture from deficit to surplus. Initially, MSP for wheat was fixed at Rs 54 per quintal with the motive to incentivize farmers to grow wheat and paddy as they were the least lucrative and labor-intensive crops.

Introduction

Minimum Support Price (MSP) is the assured price at which foodgrains are procured from farmers by the central and state governments and their agencies, for the central pool of foodgrains.  The central pool is used for providing food grains under the Public Distribution System (PDS) and other welfare schemes and is also kept as a reserve in the form of buffer stock. Currently, 23 crops have been covered under MSP along with Sugarcane under Fair & Remunerative Price (FRP). MSP ensures financial stability that encourages food production.

Issues Related to Minimum Support Price

With uncertainty in crop produce farmers are raising concerns related to legal and social guarantees in the form of MSPs and pensions. The practice of monoculture is also hampering farmers’ income mainly in areas of Punjab, Haryana, and  Western Uttar Pradesh as they have benefitted maximum from the implementation of MSP because of the Green Revolution belt.

Moreover, productivity is reducing and costs are rising which reduces profit margins. As a result, farmers are demanding the implementation of the formula of C2 + 50% which will increase the income of marginalized and laborers. These issues have given rise to Farmer’s Protest for the second time which is creating ambiguity among common people and impacting their daily chores due to constant traffic on roads, protests, etc.

Challenges

  • Lack of Proper Markets – The inefficient and non-competitive markets along with ill effects to evolve in alignment with current market conditions and negligence to develop alternatives that double the farmer’s income are posing threats to farmers’ income, thus increasing dependence on MSP. 
  • Calculation Misfit- There is still ambiguity related to the precise outcome of the formula being followed for the calculation of MSP as the Swaminathan panel proposed to include a 50% margin over cost but there is no clear reason for the same as farmers want 50% of C2 cost as compared to A2+ cost as C2 has wider coverage as it includes the imputed value of rent for own land and interest on fixed capital of farmers
  • Lack of Infrastructural Development- With the rapid pace of development in the industrial sector, defense sector, and educational sector, agriculture is facing the heat of being less developed. The mere focus is on the building of irrigational canals, sustainable alternatives to stubble burning, and increased use of fertilizers and pesticides with the advent of climate change that is pushing up the cost of agriculture and in return reducing profit margins of farmers which makes them more prone to dependence on MSP.  
  • Lack of Investments- The Green Revolution belt is witnessing rapid degradation in soil quality, groundwater reservoirs are depleting, and local biodiversity is vanishing due to the practice of monocropping that can be renewed with the help of huge investments, so farmers are seeking a legal guarantees for their crops. 

Steps Taken

  • PM AASHA (Pradhan Mantri Annadata Aay Sanrakshan Abhiyan)- This scheme aims to ensure remunerative prices to farmers that will strengthen farmers’ income by robust procurement mechanism in coordination with states and it will reduce the cost of cultivation with the help of various components of Price Deficiency Payment, Price Support Scheme, and Pilot of Private Procurement & Stockist Scheme.
  • National Food Security Mission (NFSM) is a Centrally Sponsored Scheme launched in 2007 based on the recommendations of the agriculture sub-committee of the National Development Council (NDC) to increase productivity via sustainable agricultural practices and increase farmers’ income.
  •  National Mission on Oilseeds and Oil Palm (NMOOP) to provide financial support, and quality seeds to encourage farmers to cultivate oilseeds and pulses, several initiatives are taken so that there can be diversification in cropping patterns and lifestyle of farmers can be enhanced by reducing dependence on few crops and providing alternative revenue sources.
  • Various initiatives such as the Kisan Credit Card (KCC) Scheme to every farmer across the nation, The Government has launched the Kisan Rin Portal (KRP), KCC Ghar Ghar Abhiyaan, and Weather Information Network Data Systems (WINDS) to provide timely and accurate weather information to empower farmers in making timely decisions regarding their crops that aims to ensure financial inclusion, optimize data utilization and revolutionize agriculture by improving lives of farmers across nations.
  • PM- KISAN- Currently in Interim Budget 2024-25 “Annadatta” has been under the spotlight and Rs 60,000 crore has been allotted under PM – KISAN which is almost similar to last year’s budgeted estimates to ensure regular income transfers directly to farmers’ bank accounts. 
  • Pradhan Mantri Krishi Sinchayee Yojana (PMKSY) aims to ensure better irrigation facilities to farmers at subsidized rates that ensure substantial yield of crops and fair returns.
  • Pradhan Mantri Fasal Bima Yojana (PMFBY), is a flagship program of the government that has assisted 4 crore farmers ( Interim Budget Report 2024-25) as Crop insurance had been given to 40 million farmers under the PM Fasal Bima Yojana.

Way Forward

To cope with the “ MSP Syndrome” the government should work on establishing a Research and Development wing for establishing short-term maturity crops that will result in higher yields and will be in alignment with current environmental scenario and climate change that can ensure sustainable agricultural practices. More focus should be on the diversification of cropping patterns along with environment audit and need of the hour. Instead of adopting MSP as the only go-to solution for farmers, institutional reforms should be taken that will be based on demand-driven factors and will encourage crop production that will generate higher productivity with minimal costs with the implementation of a price policy mechanism.

References

The minimum support price conundrum and Indian farming. (n.d.). Retrieved from https://www.downtoearth.org.in/blog/agriculture/the-minimum-support-price-conundrum-and-indian-farming-75115

Chand, R. (2024, February 23). How to make MSP work. Retrieved from https://indianexpress.com/article/opinion/columns/how-to-make-msp-work-9173542/

Alli, B. P. (2024, February 22). Demand for guaranteed MSP is justified. Retrieved from https://www.thehindubusinessline.com/opinion/demand-for-guaranteed-msp-is-justified/article67875583.ece

Tiwary, D. (2024, February 22). Farmer protests ‘politically motivated’, MSP law demand ‘unreasonable’, says RSS-linked magazine. Retrieved from https://indianexpress.com/article/political-pulse/farmer-protests-msp-law-rss-magazine-9173768/

Mancombu, B. S. R. (2021, November 30). Explainer: All about MSP and the demand for legal backing. Retrieved from https://www.thehindubusinessline.com/blexplainer/explainer-all-about-msp-and-the-demand-for-a-legal-backing/article37764504.ece

Minimum Support Price Policy. (n.d.). Retrieved from https://pib.gov.in/PressReleasePage.aspx?PRID=1657219

Union Home Minister and Minister of Cooperation Shri Amit Shah launched the portal developed by NAFED and NCCF for registration, procurement, and payment of tur dal-producing farmers in New Delhi today. (n.d.). Retrieved from https://pib.gov.in/PressReleasePage.aspx?PRID=1993155

Cabinet approves Minimum Support Price for Copra for 2024 season. (n.d.). Retrieved from https://pib.gov.in/PressReleaseIframePage.aspx?PRID=1990771

MSP of Essential Crops. (n.d.). Retrieved from https://pib.gov.in/PressReleasePage.aspx?PRID=1909211

Union Cabinet approves Minimum Support Prices (MSP) for Kharif Crops for Marketing Season 2023-24. (n.d.). Retrieved from https://pib.gov.in/PressReleaseIframePage.aspx?PRID=1930440

C. (2022, June 30). The future of MSP. Retrieved from https://cprindia.org/the-future-of-msp

H. (2024, February 17). The cost of legal MSP is greatly exaggerated. Retrieved from https://indianexpress.com/article/columns/minimum-support-price-msp-implementation-msp-legal-guarantee-farmer-protest-9165660/

The minimum support price conundrum and Indian farming. (n.d.). Retrieved from https://www.downtoearth.org.in/blog/agriculture/the-minimum-support-price-conundrum-and-indian-farming-75115

Vanamali, K. V. (2021, December 21). What is the Minimum Support Price, or MSP? Retrieved from https://www.business-standard.com/podcast/economy-policy/what-is-minimum-support-price-or-msp-121122100005_1.html

Vasudeva, V. (2023, June 12). Explained | Will a hike in MSP help farmers? Retrieved from https://www.thehindu.com/sci-tech/agriculture/explained-will-a-hike-in-msp-help-farmers/article66962110.ece

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