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Noted agricultural scientist M S Swaminathan has said that the market support that farmers need has three integrated components.

i) A minimum support price or MSP based on the formula of C2 + 50%
ii) A favourable procurement policy to ensure that farmers do receive the MSP
iii) Increasing consumption through the effective implementation of the Food Security Act, school noon meal programmes, etc.

The centre’s announcement on MSP has the following implications.

(i) The MSP announced is higher in absolute terms but below the recommended level. For example, the MSP of common paddy has been hiked from Rs 1550 to Rs 1750 per quintal. Taking the C2 cost of last year (2017-18) and assuming a 3.6 per cent rise in input costs based on the input cost index used by CACP, the estimated C2 cost for this year (2018-19) is Rs 1524. So, the new MSP is C2+15%, not C2+50%. In the case of ragi, the new MSP is C2+20%.Similarly, for moong, the MSP has been raised from Rs 5575 to Rs 6975, so it is now C2+19%.

(ii) Higher MSPs are welcome but there is inadequate public procurement at MSP, except in the case of wheat and rice. This is clear from the experience of farmers who cultivated more pulses, on the expectation of procurement but were let down by a crash in market prices. Indeed, for many crops including urad, tur, maize, groundnut, soyabean, bajra, rapeseed and mustard, the weighted average mandi price was below the corresponding MSP before the monsoon.

(iii) Other steps such as those recommended by the National Commission on Farmers which will help to improve both income stability as well as total income from farming will have to be introduced.Appropriate measures are also needed to ensure that groundwater over-exploitation, and other eco-destructive activities, are limited.

To sum up, announcement of higher MSPs is a welcome first step in the process of overcoming agrarian crisis. This has to be followed by more action as indicated above especially in terms of procurement and storage.


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