MSP: What are farmers demanding?
Current Affairs
Last week, the PM announced that the farm reform laws will be repealed which has also been passed in the house of parliament yesterday, but it still wouldn’t end the farmer’s protest.
The question is - what will?
The Samyukta Kisan Morcha (SKM) has put forward 6 demands, and the protests won't end till those are met.
What are these 6 demands?
Acceptance of the Minimum Support Price (MSP) as a legal right for all crops and all farmers
Withdrawal of the draft Power Regulation (Amendment) Bill 2020/ 2021
Removal of provisions for punishment for burning stubble under the Commission for Air Quality Management Act
Withdrawal of all the cases filed against protestors during the year-long protests
Suspension and arrest of Ajay Mishra, the Union minister of State for Home - due to connects to the Lakhimpur Kheri incident
Compensation and rehabilitation of the families of the ~700 farmers who lost their lives due to the protests
Of all of these 6 demands, the most debated and questionable is the legal right to MSP.
What is MSP?
Introduced in 1966-67 for the first time by the Centre, Minimum Support Price (MSP) is an informal procurement price recommended by the government with an aim to safeguard a minimum profit for the farmers for their harvest.
Initially launched as an incentive for the farmers to adopt technology to increase the productivity of the agricultural land, it is now seen as a market intervention tool and farmer income scheme.
How are the prices set?
Based on the recommendations of the Commission for Agricultural Costs and Prices (CACP), the prices are set considering various factors such as farmer wages, cost of living, allowance for rational use of resources, product competitiveness and national requirements.
Currently, MSP is applicable on...
MSP is applicable on 23 farm produces: 7 cereals, 5 pulses, 7 oilseeds and 4 commercial crops. These 23 crops cover 80% of India’s total agriculture produce.
So far, MSP is a recommendation and not a legal guarantee; there is no statutory backing for these prices or any law mandating their implementation. The government is not bound to purchase all the crops on the declared MSP, neither are the private players or mandis.
However, any purchases that the government makes, happens at the MSP.
So what does it do? It basically sets a guideline for how much the farmers must get and gives them a negotiating power to demand for appropriate prices.
However, as per a 2020 survey in various Mandis and across 10 crops, ~68% of instances in a Mandi survey show that trades happen below the MSP!
So what do the farmers want?
The government agencies currently procure 30-40% of the total produce of each crop, leaving the remaining to be sold at market prices which are generally below the MSP.
The farmers now want all the purchases to be made at least at the MSP to ensure a decent livelihood and profits for the harvesters. This can either be done by making MSP a legal base price or by the government procuring all the produce.
Author's opinion
Making MSP legal comes with huge costs burdens and a lot of changes that will have to be made to the procurement and storage policies.
This can also lead to an increase in food inflation, as market rates for all products will rise. But this might just also be necessary to ensure that farmers get their rightful due and are able to get out of the debt circle that 1000s of them have found themselves entrapped in.
The farmers don’t seem to be budging on this. Whether or not the government will give in is a huge decision to make with long-lasting implications!
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