On February 13, teams of farmers started a march to New Delhi, to press for fulfilment of their calls for, which embody a authorized assure for buying crops at Minimum Support Price (MSP) and India’s withdrawal from the World Trade Organization (WTO) which, they allege, locations stress on the Centre for drafting insurance policies for procurement and MSP. While the Centre has fastened MSP for 23 farm commodities, it’s carried out largely for rice and wheat primarily as a result of India has huge storage amenities for these grains and makes use of the produce for its public distribution system (PDS). The Union authorities has repeatedly asserted {that a} authorized assure for MSP is not going to be potential. Should MSP be legalised? Siraj Hussain and Lakhwinder Singh talk about the query in a dialog moderated by A.M. Jigeesh. Edited excerpts:
Are the protests for a legalised MSP justified?
Lakhwinder Singh: These protests have been build up over time. In 2018 too, we noticed tens of 1000’s of farmers from Maharashtra take to the streets. But their calls for are maybe not being listened to significantly, whether or not by State governments or the Central authorities.
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There is a context to this. India launched financial reforms in 1991 with a promise that we’ll quickly develop into industrialised and the agricultural workforce will transfer from the agricultural to the economic sector. More than 30 years later, agriculture has been squeezed in some ways however nobody is speaking about this agricultural disaster.
One of crucial calls for of the farmers protesting this time is a authorized assure for MSP. The public distribution system (PDS) gave assist to farmers and ensured nationwide meals safety. Now, India is anticipated to shift from meals safety to vitamin safety. A authorized assure for MSP for 23 crops is probably the way in which to do that. The farmers additionally need India to exit the WTO. We are in a part of de-globalisation. When we now have meals shortages, for example, the federal government imposes a ban on exports of meals objects (in defiance of the WTO). In a approach, the demand of the farmers is in consonance with what the federal government does.
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Siraj Hussain: The farmers are rightly involved concerning the low costs of varied crops. But their calls for is not going to be accepted by any authorities in a rush. We want an in depth, thorough assessment of agricultural commerce insurance policies and manufacturing and likewise what’s going to occur to agriculture within the subsequent 20-25 years.
After the 2020-21 protests, the federal government took seven months to arrange a committee to look into this challenge of MSP. More than a yr and a half later, the committee has not even submitted an interim report.
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Should MSP on all these crops be legalised? And will MSP survive with out public procurement?
Siraj Hussain: The mandi system within the type of APMCs (agricultural produce market committees) is practical solely in just a few States. In most others, it’s not practical. Less than one-third of the crop manufacturing in India is traded by mandis; the remaining is bought by marginal farmers to village merchants. So, even when MSP turns into legalised, it’ll be tough to implement it as a result of there isn’t any file of who’s shopping for and promoting and at what price. The authorities can’t be shopping for all of the 23 crops – even for wheat and rice it faces lot of difficulties in procurement.
Lakhwinder Singh: Legalisation of MSP is in nationwide curiosity. Numerous farmers promote commodities in casual markets. The authorities needs to make transactions digital and formal, so that is in consonance with the federal government’s intention. Also, the gross fastened capital formation within the agricultural sector after the 1991 reforms has gone down tremendously. Farmers are in misery. Legalising MSP is the reply. Let me add that the federal government is just not anticipated to purchase all of the 23 crops. But if no less than 5-10% of the produce is bought, it will be a marginal intervention and stabilise the costs.
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Is it potential to increase the MSP system to all the nation, particularly for subsistence farmers, as the federal government claims?
Siraj Hussain: Yes. Madhya Pradesh, Chhattisgarh, and Odisha have proven that the procurement system can be expanded. Even in Bihar, West Bengal, and Tamil Nadu, procurement of rice has elevated over the previous few years. But that isn’t the query. The query is whether or not the federal government ought to be procuring a lot. It has been procuring 50-60 million tonnes of rice. Is {that a} good coverage regime? The root trigger is PDS and now the federal government has made it free. That signifies that the federal government will proceed to acquire giant portions of wheat and rice.
Another concern is that legalised MSP will lead to excessive costs affecting the customers.
Siraj Hussain: I don’t suppose it’s potential for any authorities to acquire all of the commodities. It is just not potential for the federal government to repair an MSP for every part. The primary query is how to make sure a remunerative worth to farmers. My view is that it ought to be a State by State coverage. Every State has a special regime. In Punjab, for example, a worth fee deficiency system is feasible as a result of the mandi system is properly developed and the space between two mandis is just 6 km, whereas on the all-India degree it’s 12 km. The States and the Centre ought to be speaking to at least one one other. Experts need to provide you with a coverage which is able to be certain that farmers obtain a good and remunerative worth.
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Another query which you must be asking macroeconomists is on meals inflation. The authorities should additionally take care of the pursuits of customers. They need to try to stability the insurance policies of import, export, and home MSP.
Lakhwinder Singh: When the federal government is just not occupied with legalising MSP and intellectuals aren’t occupied with discussing these points, concern is created amongst customers that they’re going to be fleeced. And a binary is created of farmers and customers. The authorities is an middleman, which has to guard the rights of each customers and producers.
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The most putting challenge is meals inflation. The native costs at which farmers are promoting their produce are very low and don’t cowl the most important prices concerned (in manufacturing). On the opposite hand, customers are going through large worth rise. Legalising MSP will scale back inflation, shield customers, and provides a comparatively cheap earnings to the farmers.
Also, regulating markets is essential. The authorities has withdrawn from the regulatory mechanism and subsequently in unorganised markets, intermediaries are lively and creating inflationary pressures on the economic system.
Farmers are additionally apprehensive about enter price calculation strategies resembling A2+FL and C2+50%. What might be one of the best mechanism to calculate the enter prices?
Lakhwinder Singh: The thought of C2+50% price has come from trade. Agriculture requires remunerative costs. I believe the C2 estimation of prices for agricultural crops goes to be nearly comparable with different costs which we now have in numerous sectors of the economic system.
Siraj Hussain: There have been a number of ideas, together with a report by Dr. Ramesh Chand, about sure modifications within the methodology of calculating the price of cultivation. Those modifications haven’t but been determined. The downside is no matter worth you repair, you aren’t ready to make sure the A2+FL worth. Sometimes, the value is so low that it’s under the price of cultivation.
The reply is just not simple to search out. The authorities can’t be deciding the costs of each agricultural commodity. Many farmers and organisations desire promoting to corporates as a result of there used to be quite a lot of glut of at one level of time. Now, no less than there are some giant patrons. So, we are able to’t say that corporates ought to be fully prevented from buying and storing agricultural commodities.
Are cooperatives a substitute for assist farmers?
Siraj Hussain: Cooperatives have been profitable in sure sectors. For instance, within the milk sector, they introduced the White Revolution in Gujarat. It was because of the failure of cooperatives that the federal government got here up with the concept of farmer-producer organisations (FPOs). Now, we’re going again to cooperatives. Any type of aggregation which may also help the farmers in realising higher costs is welcome. But each cooperatives and FPOs have been captured by influential vested pursuits in rural areas. If cooperatives can create storage constructions the place the farmers can retailer their produce at cheap costs to reap the advantages of upper costs within the off season, they’re welcome.
Lakhwinder Singh: When we now have to search for alternate options, we can’t depend on a single intervention. If you need to promote cooperatives, usher in a legislation and storage capability. Government-supported cooperatives have failed due to corruption. This organisation has a future, however we’d like a authorized framework inside which they’ll flourish. And they want supportive infrastructure.
Lakhwinder Singh is Visting Professor, Institute for Human Development, New Delhi, and former Professor and head, Economics Department, Punjabi University, Patiala; Siraj Hussain is former Union Agriculture Secretary and adviser of FICCI
