Farmer Protests: Price Guarantee To Help Economy In Long Run

TWO YEARS AFTER Samyukta Kisan Morcha (SKM), a coalition of farmer organisations, called off its protest on the basis of Central government’s assurance that it will address their concerns, farmers have hit the streets again. Their major demand remains the same: a legally guaranteed minimum support price (MSP) for all crops.

Centre fixes MSP for 22 crops on recommendations of the Commission For Agricultural Costs & Prices. However, if prices go below MSP, there is no fool-proof mechanism that can get farmers government fixed rates for most of these crops, except wheat, paddy and sugarcane. While government procurement for public distribution takes care of this to a large extent in case of paddy and wheat, sugar mills are obliged to purchase all sugarcane produced within the geographical area allocated to them at a fair and remunerative price fixed by government. Government buys some pulses, oilseeds, copra, etc., when prices fall below MSP, but not regularly or comprehensively.

So, even if one ignores farmers’ call for legal guarantee for MSP in case of all crops, there is a problem that needs to be addressed. One of the promises government had made to aggrieved farmers in November 2021 was that it would find ways to ensure MSP for crops where government fixes support prices.

The first step towards fulfilling the promise was taken in July 2022 when Ministry of Agriculture and Farmers Welfare formed a committee one of whose tasks was to recommend ways to make MSP more effective. The committee has held multiple meetings but not yet submitted any recommendation so far.

Former Agriculture Secretary Siraj Hussain says there are practical challenges in implementing a law mandating that no transaction takes place below MSP. “First, at all-India level, most of the sale of crops covered under MSP is not happening in Agriculture Produce Market Committee mandis. Small and marginal farmers sell to village traders. You can’t keep track of that and ensure MSP in such cases. Second, private trade benefits from low price during peak arrivals and will oppose any legal guarantee. We have seen this in Maharashtra. Third, government does not have the physical resources to purchase, store and market all this produce if private trade does not pick up,” he says. Nevertheless, the Indian National Congress has promised a legal guarantee for MSP if they are voted to power in forthcoming general elections.

Politics aside, there are several government measures that, while keeping food prices and inflation under check, prevent farmers from getting optimal prices. One is curbs on exports when international prices are high to maintain local availability. Permission for imports to soften domestic prices is another. Irrespective of whether a legal guarantee for MSP is given or not, measures to make agriculture profitable are essential to secure livelihoods of millions who depend on farming. Multiple official committees have submitted reports in this regard. The latest was Committee on Doubling Farmers’ Income formed in April 2016. Continuing farmer agitations and fragile nature of Indian farm economy are reminders of the half-finished job that government needs to finish at the earliest. With more than half the Indian population looking at agriculture as its primary source of livelihood, remunerative prices for farm produce are integral to country’s economic growth. Farmers' protest is just a wake-up call.