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LATEST NEWS UPDATES | Minimum support price: Unkept promises on cost mitigation, bad formula to determine MSP compound farm woes -Angarika Gogoi

Minimum support price: Unkept promises on cost mitigation, bad formula to determine MSP compound farm woes -Angarika Gogoi

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published Published on Aug 23, 2018   modified Modified on Aug 23, 2018
-Firstpost.com

Farmers across India are sceptical about the promised benefits of the minimum support price (MSP) promised by the government for their kharif crop. In a press release, the government announced that the MSP would be set at 50 percent over the cost of production and vowed to double farmers’ incomes by 2022.

As Amrinder Singh Punia, a farmer and general secretary of the Punjab Agricultural University Kisan Club, points out, “Government has only concentrated on paddy, wheat and cotton procurement by its agencies like the Food Corporation of India and Cotton Corporation of India. There is no procurement of maize, ragi, jowar, moong and other pulses by government agencies.” Therefore, most farmers have little choice but to sell their crops in the open market at whatever price they can get.

Farmers know that state procurement is limited to just these few crops. What irks them is that even here, the performance of procurement agencies has been poor. As R Ramakumar, a professor at the Tata Institute of Social Sciences, Mumbai points out, for all crops (except sugarcane), fewer than 5 percent of households report sales to a government agency or cooperative that assures an MSP.

Poor procurement system

“Farmers largely sell their output to private traders. Only 31 percent of paddy farmers and 39 percent of wheat farmers are even aware of the MSP scheme. Worse, only 13.5 percent of paddy farmers and 16.2 percent of wheat farmers sell their harvest to procurement agencies. The reason for this is the shortage or unavailability of procurement agencies and local purchasers,” says Ramakumar.

He argues for expanding the procurement system rather than adopting cash-transfer models like the Bhavantar Bhugtan Yojana (BBY) in Madhya Pradesh. Under the BBY, the government pays an amount equivalent to the difference between the MSP and the average price in the market into the farmer’s bank account.

“With schemes like BBY, the government would have no incentive to expand the procurement system by investing more in warehousing and storage,” Ramakumar points out. “When procurement suffers, so does distribution; with less food procured, there would also be less scope to run an efficient public distribution system (PDS). Given the option of paying the farmer a fixed amount, the government would aim to abandon procurement, and thus distribution, altogether.”

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Firstpost.com, 17 August, 2018, https://www.firstpost.com/india/minimum-support-price-unkept-promises-on-cost-mitigation-bad-formula-to-determine-msp-compound-farm-woes-4986921.html


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