Minimum support price system is broken, the government should now fix it

The farm laws and the debate on MSP (minimum support price) could have eluded headlines in urban India had not some feisty activists mobilised tens of thousands of peasants at the borders of the National Capital. The contentious legislations have since been repealed and the protestors have withdrawn the siege. But a war of attrition continues over MSP.

Farmer bodies continue to hold sporadic protests and demonstrations in several states, but the zeal and aggressiveness may appear diminished. The public support they enjoyed earlier may also have waned.

On its part, the Union Government formed a committee to "promote Zero budget based farming, to change crop pattern keeping in mind the changing needs of the country, and to make MSP more effective and transparent". Since the Gazette Notification on its formation in July, the committee has already held three meetings. The last of the series was in Bhubaneswar on October 31.

This committee comprises 26 members, chaired by former secretary of the Ministry of Agriculture and Farmers Welfare, Sanjay Agrawal. Three positions kept for the Samyukta Kisan Morcha (SKM) were rejected by the umbrella of farm unions that organised the Delhi siege earlier. Five slots have been filled by other farmer leaders. The rest include representatives of the Union and State Governments, agricultural scientists, and economists.

The Centre fixes MSPs for 22 mandated agricultural crops on the basis of the recommendations of the Commission for Agricultural Costs and Prices (CACP). It is determined for the country as a whole and is not region or state specific.

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Agriculture is part of the State List, while some agriculture-related items have been included in the Union List and the Concurrent List. According to a CACP report, "While procurement in Punjab, Madhya Pradesh and Haryana is much higher than their share in total marketed surplus, wheat procurement in Uttar Pradesh, Rajasthan, and Bihar is much lower than their shares in total marketed surplus and production."

The main demand of farmer unions has been that MSP be legalised to ensure return for growers. It is usually the government who procures at such rates through the Agricultural Produce Market Committee (APMC) Yard or Regulated Market Committees (RMC) Yard (also called Mandis).

While yard procurement with MSP is done in Punjab, Haryana, Madhya Pradesh, etc, not all states follow the method. For example, in Bihar, Primary Agriculture Cooperative Societies (PACS) and Vyapar Mandals have been engaged to procure paddy directly from farmers in each panchayat. Bihar Agriculture Produce Market Act, 1960, and Bihar Agriculture Produce Market Rules, 1975, were repealed in 2006. However, many farmers -- especially the small and marginal -- sell their produce to the local trader (commonly called 'lala' or 'sahoo'). It is the trader who "decides" the price.

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Among farm leaders, those who are members of the government committee are strong votaries for an effective mechanism of compensation. The Rashtriya Swamsevak Sangh (RSS)-affiliated farmers' organisation Bharatiya Kisan Sangh (BKS) has repeatedly pointed out that barely 10 per cent of total farmers in the country benefit from MSP. BKS is represented by its National Executive Committee member Pramod Kumar Choudhary in the 26-member body.

Their statement is not unfounded. According to a written answer tabled in the Lok Sabha by Agriculture Minister Narendra Singh Tomar, the number of farmers who benefitted from MSP in 2018-19 was about 17.2 million. This number increased to over 20 million in 2019-20 while more than 21 million beneficiaries were reported in 2020-21.

Whereas, as per the last Census, the total number of agricultural workers in the country was 263.1 million (118.8 million cultivators and 144.3 million agricultural labourers) in 2011 itself!

Mandi system

Mandis in Punjab have been facing another issue. That of crops clandestinely entering the state from other regions. The state government has since stepped-up vigil at borders during procurement season. There were complaints of paddy from Bihar and Uttar Pradesh "flooding" its mandis. Small farmers in Bihar complain that they are forced to sell their produce to middlemen who pay them less. Either such farmers themselves, or middlemen then reportedly take the crop to Punjab.

Another demand has been to revise the formula used to calculate the price of crops. President of the Haryana unit of Bharatiya Kisan Union (Bhupendra Mann faction), Guni Prakash has questioned the system for calculation of MSP. Himself on board the government committee, he claims that the CACP has failed to give a satisfactory answer yet. His emphasis is on physical interaction with farmers on ground to calculate input costs rather than go by theoretical means.

The practice is to add 50 per cent to the computed input cost.

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However, instead of MSP, Guni Prakash is in favour of an open market and believes that the now repealed farm laws would have allowed farmers an access to the global market.

The largest group in direct confrontation with the government and refusing reconciliation in any manner is perhaps the SKM. In the battle for adequate compensation, each group may appear to be ploughing a lonely furrow. The means may vary, but in the end, the aim is to ensure an effective mechanism. And the time to formulate that is now!

Jayanta Bhattacharya is an independendent journalist. These are the writer's views.