Legal Guarantee of MSP

Subject – Agriculture

Context – central govt can get around MSP demand and end stalemate with farmers

Concept –

The major point of contention between farmer leaders and the government’s emissaries seems to be the issue of assurance of MSP for all 23 crops — including seven kinds of cereal, seven oilseeds, five pulses, and four other commercial crops. Sources said that the farmers have told the government that the Commission for Agricultural Costs and Prices (CACP) releases MSP for all Kharif and Rabi crops every year.
The government should hence assure the implementation of the same legally in practical form also.
Most of these 23 crops are purchased by private players and there is high fluctuation in the prices. Sometimes these crops are sold much below the MSP and sometimes they fetch a little more than the MSP.
The farmers, therefore, want a legal guarantee that crops can be sold only at MSP or above it.
But the government is not ready to give legal guarantees at the moment, except reiterated verbally several times that it will continue its current MSP regime, which mostly covers wheat and Paddy in Punjab, Haryana, MP and parts of UP.
The farmers, however, have refused to budge.
Some states, in the meanwhile, have already stepped in and have started compensating farmers for crops that they sell below the MSP rates under their own state-level policies.

Can state-level policies assure that the farmers get MSP for their crops?

In the past years, some states like Madhya Pradesh (MP), Haryana, Kerala have launched schemes like BhavantarBhugtan Yojna (price difference payment scheme), floor prices, and BhavantarBharpayi Yojna, respectively, under which the state governments pay the difference to the farmers when the sell their crop below MSP in the market.
While the MP government has covered some cereals, pulses, oilseed and horticulture crops under its scheme, Haryana and Kerala have covered only horticulture crops. Haryana has recently added millet to its scheme.
Under these schemes, the state price or floor price are fixed by the state governments and if the covered crops are sold below that price then the state government pays the difference to the registered farmers on their respective portals.
But experts said that state governments cannot sustain such schemes for long and also they cannot cover all the crops. Madhya Pradesh, Haryana and Kerala have not been able to cover most of the agriculture crops under it. Experts also said that there are mixed results of these schemes everywhere.

Solution – Experts have suggested some solutions:

Along with the current MSP regime, corporations, like Cotton Corporation of India (CCI), should be formed by the centre government for cereals, some of which are not covered under centres’ current MSP regime.
- CCI enters the market when the price of ‘Kapas’ (unginned raw cotton) goes below the MSP fixed by CACP. The CCI then purchases Kapas at MSP, as witnessed several times in the past in Punjab.
- This in turn forces the private players also to offer prices at par with the MSP or little more than the MSP so as to stop the CCI from purchasing all the cotton from the market.
- In the case of Basmati last year, for example, rates were at an all-time high in the international market but farmers got much less because of their dependence on the private players. That is where a corporation like CCI could step in and play the role of a deterrent to stop farmers from being exploited.
Just like wheat and paddy MSP, which the government purchases through Food Corporation of India (FCI) by taking cash credit limit (CCL) from RBI, such corporations too can follow the same policy because there is a huge market of oilseeds and pulses in our country and this way both the government and farmers will not be at loss.
Some farmer leaders suggested that even a state-Centre joint “Bhavantar scheme” can be launched to compensate farmers in case their crop price goes below the fixed rate or government can regulate purchase by private players through some policy to stop farmers’ loot.

To know about MSP, please click here and here.