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LATEST NEWS UPDATES | Cut their shackles: Why usual methods to rescue farmers will fail, and what can work in their stead -Prerna Sharma Singh

Cut their shackles: Why usual methods to rescue farmers will fail, and what can work in their stead -Prerna Sharma Singh

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published Published on Jun 12, 2018   modified Modified on Jun 12, 2018
-The Times of India blog

Dozens of farming groups determined to stall supply of fruits, vegetables and dairy products to major Indian cities is a clear indicator of growing rural discontent that the Modi government has been struggling to deal with for quite some time, amidst supply glut and depressed farm produce prices.

Worried that unhappy farmers could cost BJP dearly in upcoming state and national elections, the government has promised to extend price support to cover all crops and fix minimum support prices at 50% higher than the average cost of production. However, it is doubtful such a programme will really improve the condition of average farming households given the numerous challenges associated with its implementation, in particular, its effectiveness in checking sliding prices. Moreover it will have several unintended consequences, for instance, adverse implications for agricultural exports or ecology.

There are many crops which already have MSPs that are 50% more than the cost of production, for example, wheat, mustard, barley, gram, millet, black gram and red gram. But that’s not working as can be seen from increasing farmer protests and marches. The Centre has announced floor prices for 23 crops. However, except for paddy, wheat and sugarcane – which are backed by effective procurement – the support for other crops is indicative in nature.

Obviously, further extension of price support without assured procurement can’t be taken seriously. Moreover, even for those crops where MSPs are backed by procurement, there are challenges. First, only a selected few states such as Punjab, Haryana, MP and west UP have well-developed procurement infrastructure. Second, high leakage and wastages in procurement jack up the cost of the operation.

Thirdly, more than three-fourths of farming households don’t produce any marketable surplus and hence can’t really benefit from price support. Fourth, in case of sugarcane wherein procurement is done by private mills, populist hikes in cane pricing by the Centre and states have ruined the financials of sugar mills, forcing them to seek bailout packages to clear mounting cane arrears at a time sugar prices are at their three-year low.

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The Times of India, 11 June, 2018, https://blogs.timesofindia.indiatimes.com/toi-edit-page/cut-their-shackles-why-usual-methods-to-rescue-farmers-will-fail-and-what-can-work-in-their-stead/


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