Article by- Dr. Mukesh Mann
Understanding Role of MSP in Farmers Protest
MSP- Minimum Support price
• The intervention of government to provide a facility in less amount than the actual cost
• Market Intervention - Govt gives a guarantee to give MSP to farmers in APMC mandis
. • Procurement- Government will procure at this price.
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Who will decide this MSP-?
1. CACP- Commission on agricultural cost and prices, they estimate total cost incurred for a particular crop. Once commission recommendation, parliament decide on MSP through cabinet committee on economic affairs, Now this MSP is decided before any crop is cultivated so that farmers can decide if they wish to cultivate or not
2. Who operates MSP- APMC ensures that no sale and purchase below MSP took place ( mainly two crops are there - Rice and Wheat), After that FCI takes these purchased crops and store it and further distribute it. Categories in which MSP is given by Govt
• cereals- ( 7 Types) - main is Rice and Wheat
• Pulses-
• Oilseeds
• Commercial crops (Like Sugarcanes (FRP))
Total Crops- 22 +1 = 23 (as on sugarcane it is Fair and Remunerative Price (FRP) which is almost similar to MSP)
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Why only 6% of farmers get the opportunity to sell their crop at MSP
To understand this, we need to understand that APMC facilitate that crop should be sold at MSP (say MSP for wheat is 1900/ quintal) but it does not guarantee to purchase it if it is not sold at that MSP except two cases- Rice and Wheat In these two cases, the government guarantees to procure through FCI centers that rice and wheat if not sold at APMC at MSP, then they will procure it at MSP, Now in a real scenario- When a farmer goes to these FCI centers, they been said that since there is no space in their godown they can come after two-three days, But now imagine a farmer who comes to these centers after paying conveyance to the truck, they are forced to wait for two-three days Which may increase their conveyance further
In this journey, they decide to sell it at APMC through agents at a lower rate than MSP, say agent purchase it at Rs1500/ quintal. Now the agent who purchases this crop at Rs 1500/ quintal goes to FCI centers and due to corruption by some officers, they sell it at price say - Rs 1600/ quintal. At this stage these corrupt officers make fake entries of this purchased crop from these agents at MSP price (Rs 1900) , thus taking their commission of Rs 300, The story does not end here,
Some traders outside APMC exchange low-quality rice and wheat with high quality in FCI though these corrupt officers and that is also the reason why the quality of rice and wheat rasan bhandar is so poor that people prefer not to take it from these shops rather they prefer to purchase it from outside Subsequently, supply from FCI godown has been decreased and it gets spoiled.
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Why MSP was started?
• 1964-1965- India went through Drought
• 1965- War with Pakistan and people migration from Bangladesh, thus we need to feed them also,
• PL-480 (public law -480) - America provides us food at a lower rate.
We were not in a position to produce enough grain at that time.
Norman Borlaug (American agriculture scientist, (and MS Swaminathan, India) procure seeds from Mexico and these were given to farmers in Punjab and Haryana, argues to use good quality fertilizers and pesticides and thereby government promote farmers to use these so that India can produce enough food.
But there was a lack of motivation among farmers so a committee was formed called Laxmi kant jha committee recommends that if the government gives a guarantee to farmers that if they will get an MSP from their crop then farmers will get enough motivation to cultivate crops using said resources.
Thus n 1996, government give MSP for wheat only, so that each person in our country have food to eat But over time due to politics, parties keep on announcing MSP from different crops and now there are 23 crops in the list for which government has to give MSP.
In 1980 we became independent in food security, but yes we were not good at distribution, at present we are an exporter of food.
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But now why MSP, we are independent in food security, why do not remove MSP now?
Congress in 2013, passes a national food security bill, the worlds biggest social scheme under which 80 core plus people will get a guarantee or food security in India, Mid-day meal scheme Targeted public distribution system (TPDS) through which poor people will get food at a very low price (per person 5kg for each of Rice ( Rs3) , wheat ( Rs. 2) , and cereal ( Rs, 1) = Rs 30 for 15 kg in total ),
Thus a person can eat in Rs 30 for the whole month Under TPDS, a huge subsidy was given to people who are against laws of WORLD TRADE ORGANISATION that such type of subsidy in food cannot be given but the government somehow managed that. Now, the question is from where we get this food- obviously through FCI, which procures mainly rice and wheat at MSP but the actual cost to FCI is almost double because it has to make new godowns, transport, and maintenance, and other stuff. In rough the wheat was purchased at MSP of Rs. 1900 cost Rs 3800 to the government, and now the government has to provide that to people through these schemes at almost free of cost.
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Why debate with MSP?
Farmers asking for increment, the government want it to lower
A committee was formed called the national farmer's commission under Swaminathan Ji, The commission recommends, we can count how much cost is incurred in farming as -
• A2 - How much he cost e spends in seeds, pesticides, fertilizer
• A2+FL - A2 + Family Labor
• C2 - A2+FL +opportunity cost + capital
Where,
Opportunity cost - if he would have rented that land for another purpose then how much he would have been received.
Capital - if suppose he rather than spending Rs5 lac on farming if he would have put that amount in bank and had gained interest out of that Now commission recommends if we multiply C2 with 1.5 that should be MSP and only if we give this cost to farmers then only we are fair to farmers. Now government gets afraid of how they will give such a high cost, already they are giving huge subsidies to farmers. Now in 2014, the Modi government promises to give 1.5 of MSP, and
In 2018 just before the election they announce that yes we are giving 1.5 times of cost But actually, that cost which government announces was – 1.5*(A2+FL) and not the 1.5*C2 as recommended by the Swaminathan commission,
But, farmers are demanding 1.5*C2. Other farmers are also demanding MSP on crops other than 23 crops. Now because farmers are getting MSP they do not want to try different crops because on other crops there is no MSP. ********************************************************************************
Why framers from Punjab and Haryana are protesting?
• Right from the days of the green revolution, people from these areas have enough land and due to the fixing of MSP, they become richer than other farmers in the country.
• Data says that total FCI procure 88 % rice in Punjab and Haryana on MSP
• Data says that total FCI procures 70 % wheat in Punjab and Haryana on MSP.
• Thus total economy of Punjab and Haryana depends on MSP. Now they are afraid of thinking that because these three laws did not say anything about MSP therefore in the future, MSP will be withdrawn and the two states will be affected at large.
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Solution:-
• Farmers demand- they want to pass MSP as a bill through parliament but the government says that since MSP has not been passed till now by any government and it is always notified each year so we can not make it law.
• Also, the government is saying where we have written MSP word in these laws.
• Registration of contractors with the government before the contract with farmers.
• Essential commodity Act - Only in extraordinary circumstances essential commodities are regulated-
If a private player wishes to store essential commodity so that they can produce some product then it is permitted,
I don't think it has an issue because we are already independent in essential commodities.
Extraordinary circumstances such as -
war, natural calamities, drought,
Price Rise (last one year or an average of 5 years ) >=100% for ( vegetables, fruits, flowers)
Price Rise (last one year or an average of 5 years ) >=50% for (cereals, oilseed etc).
Also, as there is no word on MSP in these acts, therefore, I don’t think that this will affect MSP in the future;
if we see it another way then we know that As the government has to distribute food under TPDS schemes and if there is MSP and the government can buy it from FCI at one place with fixed MSP then the government does not need to procure food from private parties at a different cost to distribute it to people under TPDS scheme, thus it seems that it is beneficial to the government to buy at MSP otherwise they have to buy it from other parties which may sell it at different prices.
Note -
Above Explanation is my own understanding of the subject and it is not related directly and indirectly to any person's emotions, caste and anything which differ from above
