Guaranteed MSP is an ethical imperative
Relevance: GS Paper III
Why in News?
As general elections approach, agrarian concerns have become a central issue in political discourse. Farmers have voiced their distress and rejected the ruling government's promise to procure pulses, maize, and cotton at a Minimum Support Price (MSP), as core issues were not addressed.
Market failure and MSP:
- Given agriculture's unique nature, farmers lack the ability to exert significant influence, let alone determine the price of their produce. This constitutes a ‘market failure.’
- Thus, MSP ensures that agricultural commodity prices remain above a predetermined benchmark to facilitate remunerative price discovery.
- The MSP regime is a vital instrument for ensuring food security in India.
- The issue of fair pricing of farm produce is a pressing concern, now coupled with calls for legal assurances of MSP.
- However, beyond mere legal mandates lies the pressing concern of maintaining self-sufficiency in food production and addressing the ongoing challenge of distribution.
- This underscores the ethical imperative of anchoring a legal guarantee for MSP.
Produce and perish trap:
- The MSP is announced annually for 23 crops covering both the kharif and rabi seasons, well in advance of sowing, with 21 of them being food crops.
- However, despite the announcements, the implementation of MSP remains poor.
- Only 6% of farmers, primarily those cultivating paddy and wheat in States such as Punjab, benefit from MSP. Sugarcane growers already benefit from a ‘statutory’ MSP, which sugar factories strictly adhere to when purchasing cane from farmers.
- Most transactions involving essential food commodities occur below the MSP, rendering farming economically unviable for most producers in India.
- As a result, farmers are trapped in a dangerous cycle of produce and perish, leading to crippling debt and deaths by suicide.
- All these emphasise the pressing need to ensure MSP, including the one recommended by the eminent agricultural scientist M.S. Swaminathan, that MSP should have a 50% profit margin.
Political dynamics and policy:
- The PM-AASHA comprises schemes for price support, price deficiency payment, and incentives to private traders to ensure MSP.
- Although it possesses all the necessary elements as precursors to guarantee the MSP, its sidelining in policy circles demonstrates how political pragmatism is in charge.
- Farmers hardly get 30% of the price paid by the consumers; this will increase if MSP is guaranteed.
- Establishing a legally binding MSP will anger intermediaries as their share will be reduced. Government intervention, particularly a legally binding MSP, is often deemed a problem.
- Adherence to free market dogma prevents a just solution to the ongoing crisis in farmer incomes.
Case for legal mandate for MSP:
- United Nations:
- The United Nations Declaration on the Rights of Peasants supports the legal recourse to guaranteeing MSP.
- National level:
- A private member bill on The Farmers’ Right to Guaranteed Remunerative MSP for Agricultural Commodities was tabled in Parliament in 2018.
- State governments:
- The Karnataka Agricultural Price Commission has laid out a clear roadmap, including potential financial commitments, to ensure a legally binding MSP for crops cultivated in the State.
- The Andhra Pradesh government unveiled a draft bill last year aimed at guaranteeing MSP for crops grown in the State.
- A few years ago, Maharashtra attempted to amend its Agricultural Produce Market Committee (APMC) Act to prevent the purchase of agricultural produce below MSP.
- Still, the effort failed due to a lack of political will and a comprehensive strategy.
- Opinion survey:
- According to a recent opinion survey by an English TV channel, 83% of landowners and 77% of farm labourers expressed solidarity with the agitating farmers.
- Notably, 64% of the public also endorsed the farmers’ demand for a legal right to MSP.
- These efforts show that the objective of establishing a legal recourse to MSP has not emerged suddenly, nor is it impossible to attain.
Way forward:
- Legalised MSP: A minor amendment to respective State APMC Acts or the Centre’s Essential Commodities Act would suffice to introduce a law ensuring that farmers’ produce is not traded at prices below the MSP.
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- The budget outlay will not be as large as projected if legal recourse to MSP is accompanied by essential backward and forward linkages.
- Crop planning, market intelligence (including price forecasts), and other pre-sowing measures, along with establishing post-harvest infrastructure for efficient storage, transportation, and processing of farm commodities, will greatly assist in managing the post-harvest glut in the market.
- Therefore, a legal route to MSP, complemented by the development of such linkages, would protect against “market failures” in addressing the surplus rather than leading to “market distortion,” as some mainstream economists claim.
- M.S Swaminathan Commission recommendation: Enhancing MSP to provide a 50% profit margin over total cost is not challenging, considering that current margins are already around 22%.
- Effective procurement and distribution: Effective procurement and distribution, as envisaged under the National Food Security Act, 2013, is the most appropriate means of ensuring MSP and addressing hunger and malnutrition.
Conclusion:
The ongoing crisis among farmers in India reflects the complex interactions between agricultural policy, economic challenges, and political dynamics. Farmers are deeply concerned about the lack of a legal guarantee for minimum support prices (MSP). Addressing this issue requires a comprehensive approach that involves policy reforms, infrastructure development, and political will to prioritize the welfare of farmers over market considerations.
Mains PYQ
Q. What are the major factors responsible for making the rice-wheat system a success? In spite of this success how has this system become bane in India? (UPSC 2020)
Q. What do you mean by Minimum Support Price (MSP)? How will MSP rescue the farmers from the low income trap? (UPSC 2018)
Q. How do subsidies affect the cropping pattern, crop diversity and economy of farmers? What is the significance of crop insurance, minimum support price and food processing for small and marginal farmers? (UPSC 2017)
