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LATEST NEWS UPDATES | Why 'one nation, one MSP' is not working -Rajalakshmi Nirmal

Why 'one nation, one MSP' is not working -Rajalakshmi Nirmal

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published Published on Jul 10, 2017   modified Modified on Jul 10, 2017
-The Hindu Business Line

Varied production costs, low-grade produce, limited surplus are key factors

Farmers across many States, including Madhya Pradesh and Maharashtra, are up in arms demanding implementation of the National Commission on Farmers report, which suggested fixing the minimum support price (MSP) for crops 50 per cent above the cost of production.

But the MSP of many crops already has a built-in profit margin of 40-50 per cent. So, what is behind the angst of farmers?

For the kharif marketing season 2017-18, the CACP (Commission for Agricultural Costs and Prices) has projected the all-India average cost of paddy at Rs. 1,117/quintal (including family labour) and recommended an MSP of Rs. 1,590/quintal, a margin of 42 per cent for the farmer.

In maize (36.9 per cent), paddy (38.7 per cent), bajra (50 per cent), tur (58 per cent) and urad (59 per cent), too, there is a profit for the farmer.

In fact, in tur, urad and moong, the Centre has announced an additional bonus of Rs. 200/quintal, which increases profits for the farmer.

While the Centre’s projections are upbeat, not many farmers are able to realise these profits. One reason could be that only a few commodities get the government-fixed MSP. For instance, fruits and vegetables do not have support prices. But even in crops where there is procurement, farmers feel short-changed.

Higher cost of production

This is because the cost of production of various crops differs from State to State and from farmer to farmer. But CACP averages the costs of all the States to fix the MSP for a crop. So, farmers in States with a higher cost of production are unable to get a healthy spread over the guaranteed price.

Take, for instance, labour costs. Last year, the daily wage rates for agri labour were Rs. 180-200/day in Madhya Pradesh, but Rs. 360-380/day in Haryana and Rs. 660-670/day in Kerala.

CH Ganga Reddy, who owns eight acres in Nizamabad and cultivates turmeric, maize and jowar, says: “Labour is expensive now. But, even if we are willing to pay more, we are not getting labour to work on our land as they prefer MNREGA…”

Other costs of production also vary by State depending on the fertility of the soil, weather, pest attacks, and quality of seeds.

In Bihar, for instance, maize seeds cost Rs. 3,100/hectare in 2014-15, CACP data show. But in the same year, the cost of the seed in AP was Rs. 5,099/hectare. Similarly, for soyabean, the total cost of fertiliser and manure used in 2014-15 was Rs. 2,959/hectare in MP while it was Rs. 4,919/hectare in Maharashtra.

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The Hindu Business Line, 9 July, 2017, http://www.thehindubusinessline.com/economy/agri-business/why-one-nation-one-msp-is-not-working/article9756514.ece?homepage=true


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