UPSC Express

Agriculture is the major source of income of more than half of India’s population. Yet, the farmers’ fortunes are not predictable but depend on many things, including rains, prevailing prices, and indebtedness. The problems are exacerbated due to non-remunerative MSPs and poor state of government procurement. Unless they have assured and reasonable returns, farmer discontent and resultant agitations will continue.

Issues with MSP and Procurement:

MSP: Data from CACP shows farmers earned just a 6.7% return over costs (going by MSP) for paddy, while returns for pulses like moong in 2016-17 were just 0.7% over costs. Also, NSSO data shows that only 6 per cent farmers in the country get the benefit of MSP in reality.

Procurement:  Out of the 20-plus crops for which the government fixes the MSP every year, effective procurement takes place only in paddy, wheat and cotton. Even here, procurement is concentrated in a few States. For example, in 2016-17, for instance, only 31.5 per cent of the marketable surplus in wheat was procured by FCI, and 90 per cent of this was in just three States — Punjab, Haryana and Madhya Pradesh. This means farmers are forced to sell their produce at a loss in wholesale markets as government procurement agencies didn’t buy enough.

Way forward:

Increase MSP:

• While input costs for farming have been rising, the rise in MSP has been sluggish. State support is needed for making farming more lucrative.
• The government must consider M.S. Swaminathan Committee’s recommendation that the MSP should be 1.5-times the cost of production.

However, unless there is a procurement guarantee from the government, the MSP has little meaning on the ground. Measures that need to be taken on procurement:

• There needs to be guaranteed procurement of all major crops, and enough procurement centres should be made available for this.
• Government centres must start procurement soon after the harvest.
• The process of to ascertain the quantity of land on which the crop was sown, and the yield must be made easier.

While raising MSP is responsibility of the center, procurement is the responsibility of State governments and local bodies. Village-level co-operatives need to be revived for procurement. For the medium to long term, measures must be taken to raise agriculture productivity as well as to ease trade and price discovery so that farmers do not depend on the government for better prices and procurement.