Will A Hike In MSP Help Farmers?

• Posted on June 13, 2023
• Editorials

Will A Hike In MSP Help Farmers?

Context : 

• To “ensure remunerative prices for growers for their produce and to encourage crop diversification,” the Centre announced last week the Minimum Support Price (MSP) for this year’s summer (Kharif) season crops, raising prices by between 5 and 10% from the previous season.
• Several farming organisations have voiced their displeasure with the most recent MSP for the summer crops, calling it insufficient.
• For the vast majority of farmers over time, particularly small and marginal farmers, farming has not proven to be profitable. The long-term solution to the financial hardship of farmers may be an increase in their revenue.

Challenges faced by farmers:

• Delayed opening of procurement centres:

• • •  Farmers encounter challenges when procurement centres open late or are situated far from their farms.
    • Farmers are more vulnerable when procurement centres are delayed, which costs money.

• Exploitation by Commission Agents

• • • Commission agents take advantage of farmers’ lack of market awareness by purchasing their produce for less than the MSP.
    • This defeats the MSP’s intent and disadvantages farmers financially.

• Farmers’ lack of knowledge: 

• • Many farmers are unaware of the MSP’s advantages.
  • Their inability to use the MSP and access government procurement processes is hampered by this lack of awareness.

Minimum Support Price:

• The MSP is an advisory price signal set by the government to protect farmers and guarantees they earn a minimal profit for their agricultural output.
• It seeks to improve food security in the nation by motivating farmers to produce necessities.
• The MSP has evolved since it was first implemented in the 1960s as a means of encouraging farmers to adopt new technologies and raise agricultural output.
• It has transformed into a market intervention and farmer income assistance programme over time.
• The MSP is an advisory price signal set by the government to protect farmers and guarantees they earn a minimal profit for their agricultural output.
• It seeks to improve food security in the nation by motivating farmers to produce necessities.
• The MSP has evolved since it was first implemented in the 1960s as a means of encouraging farmers to adopt new technologies and raise agricultural output.
• It has transformed into a market intervention and farmer income assistance programme over time.

What is the government’s announcement?

• For the marketing season of 2023–2024, the government published the MSP on June 7 for 17 “kharif” crops, including cotton, rice, and pulses (moong, arhar, and urad).
•  At a meeting of the Cabinet Committee on Economic Affairs (CCEA), they were authorised. The government claims that the rise in MSP is in keeping with the announcement made in the Union Budget 2018–19 to fix the MSP at a level of at least 1.5 times the weighted average cost of production for all of India, which aims to provide farmers with a fairly reasonable wage.
•  The increase in MSP for Kharif crops this year, according to Food Minister Piyush Goyal, is the biggest in comparison to prior years.

What about foodgrain stock?

• Regarding foodgrain production:

• • • The third advance estimates for the 2022-23 crop year in India indicate a record foodgrain production of 330.5 million tonnes.
    • This production level represents an increase of 14.9 million tonnes compared to the previous year (2021-22).
    • The 14.9 million tonne increase is the highest growth in the last five years, as per government data.

• Impact of delayed monsoon on cropping:

• • • M.S. Sidhu, a former professor at Punjab Agricultural University, suggests that a delay in monsoon rains can affect cropping in non-irrigated regions.
    • Approximately 51% of the country’s cultivated area relies on rainfall for irrigation.
    • If rains are delayed, there is a possibility of an impact on agricultural activities in these rain-fed regions.
    • The timing and quantity of rainfall are crucial for the growth and yield of crops.

• Foodgrain stocks and food security:

• • As of May 1, 2023, the total stocks of rice and wheat held by the Food Corporation of India (FCI) and State agencies amounted to 555.34 lakh tonnes.
  • These stocks comprised 265.06 lakh tonnes of rice and 290.28 lakh tonnes of wheat.
  • The quantity of food grains held indicates that the country has a comfortable level of stocks to meet immediate requirements and maintain food security.

Potential solutions:

• Establish an assured market mechanism:

• • • The government, including both the Centre and States, should develop a robust system to ensure an assured market for farmers’ produce.
    • This mechanism would include setting up procurement centres promptly and ensuring easy accessibility for farmers.

• Strengthen the legal status of the MSP:

• • • Farmers’ demand for legal status for the MSP should be addressed.
    • Enact legislation to provide a concrete legal framework for the MSP, which would include provisions for the procurement of produce at the assured price.

• Improve transparency and accountability:

• • • Implement measures to enhance transparency in the procurement process, such as digital platforms for selling produce.
    • Provide farmers with accurate and timely information on prices, procurement centres, and MSP-related updates.
    • Monitor and take strict action against commission agents and middlemen involved in malpractices.

• Enhance farmer awareness:

• • • Conduct widespread awareness campaigns to educate farmers about the MSP and its benefits.
    • Use various channels such as workshops, training programs, farmer organizations, and agricultural extension services to disseminate information.

• Strengthen enforcement mechanisms:

• • • Establish mechanisms to ensure compliance with the MSP and take prompt action against any violations.
    • Regularly monitor the procurement process and address grievances raised by farmers.

• Promote fair trade practices:

• • • Encourage fair trade practices by promoting competitive and transparent bidding processes during procurement.
    • Provide a platform for farmers to directly sell their products without the involvement of intermediaries, ensuring better returns.

• Invest in infrastructure development:

• • Allocate resources to improve agricultural infrastructure, including storage facilities, transportation networks, and market linkages.
  • This will help reduce post-harvest losses, ensure timely procurement, and facilitate farmers’ access to markets.

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