June 21, 2022

MSP policy A delicate tool in the agricultural sector

In a surprising gesture, Prime Minister Narendra Modi announced that the three controversial agricultural laws would be repealed during the winter session of parliament. Soon after, Samyukt Kisan Morcha, an alliance of 40 agricultural unions, demanded that the Minimum Support Price (MSP) for all agricultural products become a legal right for all farmers.

The farmer group said this would guarantee each farmer at least the MSP for their entire harvest. The guaranteed MSP establishes a basis for the market costs of agricultural products and ensures that all trade occurs at the MSP or at more exorbitant costs. For now, the MSP does not aim to set a floor at market prices but to prevent any sharp fall.

“Agricultural reforms are needed to ensure that our production keeps pace with the ever-changing Indian consumer consumption. Currently, a large part of consumer demand is met by companies that import similar products for economic or quality reasons, which reduces the demand for Indian products. cultivated products. This gap needs to be bridged by keeping the interests of farmers aligned, ”said Akshay D’Souza, chief growth and knowledge officer, Bizom, a retail intelligence platform.

Farmers sell their surplus produce on the open market. Market costs for virtually each of the 25 crops eligible for MSP are below the base cost for government procurement. According to the Agricultural Costs and Prices Commission (CACP) report, the weighted average market price of wheat for all of India has been below the MSP in 3 of the last 5 marketing years for rabi.

“In a growing market, there are enough margins for all stakeholders, including farmers, shredders, consumer brands, etc. demand market, PSMs are a short-term solution for the temporary lack of demand. This is where the various government agencies have played a very key role. However, in the longer term you need market dynamics to determine the prices rather than an artificial MSP price to have helped farmers and manufacturers realize the full potential of their products, ”said D ‘ Souza.

During the last marketing year, the normal weighted market cost for wheat fell more than 5 percent below the MSP. Essentially, the normal market cost for paddy was additionally below the MSP during the last five marketing years.

Market costs are usually controlled by the interest and position of supply for particular crops, but they can be reduced when farmers do not know the PSM of a yield and government procurement offices do not. not work around their areas.

According to data from the National Sample Survey in its cycle from July 2018 to June 2019, the lack of awareness of yield PSM was exceptionally high among farmers. MSP’s lack of awareness of returns that see gigantic acquisitions was also high.

The report titled “Assessment of the Situation of Farm Households and Household Land and Farms in Rural India” in 2019 found that more than a third of the farmers who cultivated cereals in Punjab were unaware of the MSP for food grains. Speaking of farmers in Punjab, who cultivated paddy, about half were unaware of the paddy MSP

Meanwhile, the neighboring state of Haryana also witnessed the exact situation, where a similar proportion of farmers who grew wheat were unaware of the crop’s MSP.

At the national level, the survey found that knowledge of MSP among farmers for the two food grains was low. About 60 percent of the farmers who produced paddy as a summer crop and 47 percent as a winter crop were unaware of their MSP. Meanwhile, a total of 63 percent of farmers who grew wheat were unaware of his PSM.

According to the survey, knowledge of other crops such as legumes was very poor. Interestingly, the MSP for pulses has been increased in order to encourage farmers to increase the area cultivated for these high protein food products. However, a total of 70 percent of the farmers who produced legumes like masur (red lentil), chana (split chickpeas), etc. were not aware of the MSP of these food crops.

MSP and government agencies need to help more farmers, government agencies need to strengthen procurement methods in different states and educate pastoralists.

“To ensure that agriculture continues to thrive, we must drive 3 keys: We must enable farmers to have greater access to the market so that they can realize the full value of their agricultural product. Easier access to products. and flexibility to ensure superior quality for manufacturers Globally competitive prices for local products can be driven by increased yields through the use of information and technology that are introduced into agriculture Added D’Souza.