Offer limited to pulses, maize and cotton crops, key demand on MSP calculation left out
Farmer leaders rejected the government’s proposal to purchase pulses, maize and cotton crops by different government agencies at minimum support prices (MSP), on February 19, 2024, saying that it was “not in their favour”.
In the fourth round of talks on February 18, 2024, a government panel comprising Union Commerce and Industry Minister Piyush Goyal, Agriculture and Farmer Welfare Minister Arjun Munda and Minister of State for Home Affairs Nityanand Rai proposed involving cooperative agencies like National Agricultural Cooperative Marketing Federation of India Ltd (NAFED), National Cooperative Consumers’ Federation of India Ltd (NCCF) and Cotton Corporation of India.
Read more: Denying MSP legal guarantee threat to India’s food security
The agencies will enter into five-year contracts with farmers, ensuring purchases of pulses, cotton and maize at MSP without quantity limitations, the proposal said.
However, farmers have demanded a legal guarantee for all 23 crops for which the MSP is determined each year, not just pulses, maize, and cotton.
“We stand by our demand of legal guarantee of MSP on all 23 crops,” Jagjit Singh Dallewal, Bharatiya Kisan Union (Sidhupur) leader, told reporters.
The farmers said they would resume their “Dilli Chalo” protest at 11 am, February 21, 2024.
Shifting focus to crop diversification
Farmers and experts believe that the proposal is a diversion of focus from a legal framework for MSP to a couple of crops and to the subject of crop diversification.
According to the proposal, only farmers who switch to other crops from paddy will receive MSP, Sarvan Singh Pandher, Kisan Mazdoor Sangharsh Committee general secretary told reporters on the night of February 19.
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“The government has diverted attention from the actual demands of the farmers. Somehow, the government thinks it is a Punjab farmers’ protest, so it is giving them a solution to their crisis. But Punjab farmers have actually come to address a national issue, they are asking for the legal right to MSP for 23 crops, which will benefit farmers from all across the country,” said leading food and agricultural policy expert Devinder Sharma.
For almost a year, market prices for arhar (pigeon pea), urad (black gram), masoor (red lentil) and maize have been either above or equal to MSP, and government agencies will not be required to procure anything from the current market.
However, oilseed crops like groundnut, sunflower, mustard and soybean have been below MSP, mostly owing to cheap imports, and thus require government intervention.
Announcing the proposal on February 18 night, Goyal emphasised on crop diversification. This approach will save Punjab’s farming, improve the groundwater table and save the land, which is already under stress, from getting barren, he said.
“If the prices for pulses are above MSP then why has diversification not happened till now,” questioned Sharma.
Because the net return on paddy outweighs return on other crops. “For diversification to happen, the farmers have to be given the same per hectare net return on crops like pulses through a price assurance mechanism. The government’s proposal has shifted attention to something more local than national,” he said.
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MSP calculation
The government offer also did not address the other key demand, which is to calculate MSP using the formula C2+50 per cent, which takes the cost of production as paid out cost plus the input value of family labour and the rental value of owned land and interest on fixed capital.
This was recommended by the National Commission on Farmers report, chaired by agricultural scientist MS Swaminathan.
MSP calculations are currently based on A2+FL, as recommended by the Commission for Agricultural Costs and Prices (CACP), a government-appointed expert body that recommends MSP for agricultural products. A2+FL is the paid out costs plus the input value of family labour, which is lower than C2. Farmers argue that if MSP was calculated by C2+50 per cent, products would be priced around 25-30 per cent higher.
Farmers are increasingly being exposed to price volatility owing either to climate change shocks or flip-flops in government trade policies. Agricultural economist Shweta Saini said the need of the hour is providing a remunerative structure to farmers and assuring stability of trade policies.
“An MSP is announced, but then imports are opened up, for example, in case of pulses. Farmers will sow the crops if they know that the market won’t be dumped with imports and trade decisions won’t be reversed,” said Saini, who is the chief executive of Arcus Policy Research.
Read more: Farmers’ protests increased five times in India from 2017-2021: CSE
In 2023, India saw a 39.7 per cent increase in the import of pulses, compared to 2022.
The MSP declaration has to align with the bigger macro picture of the country, like in the case of wheat and paddy, to ensure food security, argued Saini.
“If we talk about pulses and maize, they align with the bigger picture of nutritional security and energy security (maize being used for ethanol blending) currently. When a policy design aligns with the bigger picture of the nation, you see a sense of predictability and stability. The government should let the markets play their role but find a way to deliver MSP to farmers when prices fall. That should be ensured over the physical procurement of these crops,” she said.
The current discussions between the government and farmers are a historic opportunity to move towards structural reforms in pricing policy in agriculture, Sharma said.
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