Elusive Minimum Support Prices?

Elusive Minimum Support Prices?

Prof.T K Thomas

Media today follows and highlights what would attract the maximum eyeballs. The Prime Minister and the ruling party often succeed in grabbing headlines but sometimes other events push a PM story behind with not so complementary tiding for the ruling dispensation. A maverick chief minister won a legal battle in the apex court last week to claim that his ‘elected’ government had an upper hand in the affairs of the state over a ‘selected’ Lt. Governor. It is another matter that despite the decision of a five member Constitution Bench, there has not been any finality on the issue, with the central government claiming that “nothing has changed in Delhi’s power structure”. The casualty in the eyeball game in the media of course was the ‘historic announcement’ by the Prime Minister on hike in Minimum Support Price [MSP] for agricultural produces which was relegated to the second headline behind the Kejriwal story!

This proves that the media is more interested in politics than political economy. While the Supreme Court verdict has plenty of political significance, the MSP story probably would marginally benefit the distressed farmers of the country. So, one sent a WhatsApp question to a progressive farmer friend. The question read, “How do you react to the MSP hike announced yesterday? Master Stroke or Gimmick?” The answer was rather cagey. “This is not the proper time to react on government announcements; these days all political parties are controlled by extraneous forces and are indulging in gambles!” What he probably meant was that parties are taking chance to reap political bounties.

One was not exactly happy with that reaction and met an old friend, a London School of Economics alumnus, a former professor of Indian Institute of Public Administration who also had a stint as director of the Food Corporation of India. Prof. Kamal N Kabra explained how successive governments have failed or rather one may put it as ‘hoodwinked’ the Indian farmers, not of the ‘kulak’ clan but an overwhelming majority of small and marginal farmers. Their toil and precarious personal finances have relegated lot of them to become farm labor or to quote one’s university days’ cliché of the Indian farmer as someone, ”born in debt, lives in debt and dies in death”.

As usual there were reactions to the hike in MSP depending on which side of the political spectrum people or media are on. While the decision to hike the MSP was announced by the Home Minister Rajnath Singh[and not by the Agriculture Minister], the Prime Minister called it ’a historic increase” and tweeted that the government has fulfilled its promise of increasing the MSP to the tune of one and a half times of the cost of production. In actual terms the government hiked the MSP of 14 Kharif crops; seven of those 14 crops have reported hikes of over 20 % compared to the MSP for crops in 2017-’18.[Incidentally the two Arabic terms used to denote the Indian cropping seasons viz. Kharif and Rabi are not familiar to the general public in the southern states. While the Kharif season is from July to October during the South Western monsoon, Rabi season is from October to March which is the winter season.]

Any increase in MSP is welcome for the distressed farmers. Farmers in Madhya Pradesh and other states have been agitating demanding remunerative price for their produces. The number of farmer suicides has reportedly gone up. The ‘Long March ‘ as it is known, the 180 kilo meters march to Mumbai by Maharashtra farmers in March this year was essentially, among other things was for implementing the recommendations of the Swaminathan Commission set up in 2004 and the report submitted in 2006. The Commission had recommended a MSP of 50% profits above the cost of production classified as C2 by the Commission for Agricultural Costs and Prices [CACP]. Till 1985 CACP established in 1965 was known as Agricultural Prices Commission as a farm advisory body. Even not so literate farmers are familiar with the definitions by CACP. While doing a story on distress sale of potatoes one had come across a farmer from a village near Agra who explained that A2 covers all paid out expenses incurred by the farmers in cash and kind on seeds, fertilizers, hired labor, fuel, irrigation etc. A2+ FL adds imputed costs of family labor etc. One is told that most of the farmers are well versed in the formulae for MSP calculation. Procurement, public distribution system, trends in market prices, demand and supply, international price situations and a host of other issues are considered while determining MSP.

Dr. Swaminathan reacting to the MSP hike announced last Wednesday by the government in a media statement said while welcoming the hike that “the MSP announced was higher in absolute terms but below the recommended level. He called for better procurement and storage policies and commented that the MSP policy, ”should have three integrated components, such as an MSP based on the formula of C2+ 50 %, increasing consumption through effective implementation of the Food Security Act, school noon meal programmes and a policy to ensure farmers receive the MSP promised”.

That is the moot point to really care for the farmers and not just promises. A national newspaper had an interesting headline last month on the ‘MSP Mirage’ and that continues to haunt the farmers. According to a political observer the announcement last Wednesday of MSP hike was more of gimmick though certain sectors like bajra and oil seeds of those crops in states where Assembly elections are imminent farmers have reasons to celebrate. A day after the Central government’s announcement of a Rs.15000 crore MSP bonanza, Karnataka Chief Minister came out with a three times more,Rs.45000 crore farmers’ loan waiver! In these days of ‘competitive federalism’ populism has no boundaries!

Prof. Kabra had mentioned the Panchayat level warehousing project which he had initiated. After some meaningful beginnings the project fell by the wayside. In fact, such a scheme of each Panchayat from across the length and breadth of the country setting up a warehouse would have empowered the farmers to store their produce waiting for more remunerative price. The problem is one of lack of or poor implementation. One is reminded of a very ambitious programme of the Madhya Pradesh government. Plagued by statewide farm distress and farmers’ suicide the state government introduced “Bhavantar Bhugtan Yojana”, [Price deficiency payment scheme] a programme that promised the farmers payment of difference between the Minimum Support Price and the market price which a farmer received for a number of items like soya bean, peanut, sesame, daals etc. By October 2017, around 23 lakh farmers had registered in the scheme separately crop wise. The programme started off well and a comment that gone almost viral was, “Baniya deta Mandi mein , jo bachta hai who sarkar deti hain’. [ “What the trader gives in the market, the government gives the balance.”]

The Madhya ‘Pradesh Bhavantar Bhugtan Yojana’ soon caught the imagination of BJP and non BJP states who were interested in replicating the scheme in their respective states. However, after a flourishing start there were glitches and the systemic failures as a result of which there were plenty of complaints about the payment schedule from the concerned agencies. According to the Business Standard, the scheme started during the Kharif season in 2017 did not last till the ensuing Rabi Season as the scheme had to abruptly withdraw the main commodities after the Centre declined financial support awaiting a formal national roll out! Will a very promising programme like the Bhavantar Bhugtan Yojana survive? Will our farmers wait for another announcement on hiked Minimum Support Price chasing the mirage called MSP? According to a recent report of the National Sample Survey Office those who own more than four hectares of land comprise only 4.1 % of the farming population. So an overwhelming majority of Indian farmers are said to be outside the purview of government benevolence from loan waiver to MSP!

According to Prof. Kabra, most of the Indian farmers are late buyers of everything from seeds, fertilizers, pesticides and ultimately food for survival as their annual yield from their small holdings last for only a part of the year. On the other hand the big land owning rich farmers are sellers of everything- seeds, fertilizers, fuel, water and of course lenders of money, tractors and other costly agricultural equipment. They also are the beneficiaries of all government schemes!

We witnessed one of history’s greatest revolutions, the ‘’Green Revolution” in the 1960s thanks to our farm scientists, a receptive farming community and pro active policies. In fact, we had followed such a revolution credited to have started in the 1940s in developing countries like Mexico. Growth in the agricultural sector was mainly due to high yielding varieties of crops, better techniques and new fertilizers. According to Prof. Kabra it was the then minister C. Subramanyam who introduced the improved, high yielding variety of wheat from Mexico. One cannot ignore the seminal contribution of scientists like Nobel Prize winner and Padma Vibhushan Dr. Norman Borlaug and our own living legend Dr. M S Swaminathan. Agricultural production increased tremendously and a food deficit country was transformed into self sufficiency. Can we go back to those days of concerted efforts by the farmers, leaders, scientists and technocrats and usher in a new Green Revolution which will not just benefit 4.1 % of the Country’s farming population?