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The Standing Committee on Agriculture, Animal Husbandry, and Food Processing recommended adopting a legally binding Minimum Support Price (MSP). It also urged the agriculture department to issue a road map for its implementation as soon as possible.

Standing Committee Report

Agricultural procurement process

The committee highlighted that procurement levels were very low. For example, only 0.5% of agricultural produce was procured out of 100%. Specific procurement numbers included 23% of wheat, 0.37% of gram, 9.19% of rapeseeds, and very little sunflower and masar daal. This low procurement limits the effectiveness of the MSP system.

Reducing farmer suicides and stabilizing food production

The committee emphasised that MSP could play an important role in reducing farmer suicides by providing financial stability and protection from market volatility. It reduces debt burdens and improves farmers' mental health.

MSP stabilises food production by ensuring fair prices, allowing farmers to plan in advance and maintain output without fear of market price fluctuations.

PM-KISAN Scheme

The committee recommended increasing the annual PM-KISAN scheme support from Rs 6,000 to Rs 12,000. The scheme currently pays eligible landholding farmer families Rs 6,000 per year in three installments of Rs 2,000 each.

The committee asked whether the PM-KISAN scheme would be linked to inflation, pointing out that it had been in operation for five years already. However, the agriculture department responded negatively, stating that there are no plans to link the scheme to inflation.

Government's allocation to agriculture

The committee noted that the Center's fund allocation for agriculture had dropped from 3.5% in 2020–21 to 2.5% in 2024–25. It recommended an increase in agricultural budget allocations.

Contradiction in government schemes

The committee discovered a conflict between promoting natural farming and the Namo Drone Didi program for applying fertilisers and pesticides. It questioned how the government would encourage synergies between conventional and natural farming, as these schemes appeared to contradict one another.

What is the Minimum Support Price (MSP) and why was it introduced?

It is the minimum price at which the government purchases crops from farmers. It was introduced in 1966-67 as part of agricultural reforms to shield farmers from market volatility and natural disasters. 

It ensures that farmers are paid a fair price for their produce, encouraging them to continue farming despite market fluctuations.

The MSP is set for 23 crops, which include:

• Cereals: Bajra, wheat, maize, paddy, barley, ragi, and jowar.
• Pulses: Tur, chana, masur, urad, and moong.
• Oilseeds: Safflower, mustard, niger seed, soybean, groundnut, sesame, and sunflower.
• Commercial crops: Raw jute, cotton, copra, and sugarcane.

How does the government decide on the MSP for these crops?

The government announces MSP at the start of each cropping season. The Commission for Agricultural Costs and Prices (CACP) investigates the cost of production, including the farmers' actual expenses, family labour, and other fixed costs such as rent and assets. Based on these considerations, the CACP recommends a fair price to the government.

Why is the implementation of a legally binding MSP considered important?

The implementation of a legally binding MSP is essential for protecting farmers' livelihoods, promoting rural economic growth, and improving national food security. 

MSP-assured income encourages farmers to invest in agricultural practices that can increase productivity and sustainability, thereby contributing to long-term food security.

Can the government provide a legal guarantee for MSP?

The government could provide legal support for MSP in two ways;

• It could establish MSP as the mandatory baseline price for all market transactions, requiring private players to pay at least MSP. 
• The government could purchase all crops at MSP. 

However, both methods could result in price increases and inflation, affecting consumers, mostly the poor.

What alternative solutions are suggested to address farmers' issues?

Instead of establishing an MSP for all crops, it may be more effective to provide direct income assistance to the poor, regardless of whether they are farmers. 

Increasing investment in agricultural infrastructure—such as irrigation, credit access, power supply, and storage facilities—could help farmers become more resilient. 

There is also a need to reduce disguised unemployment in agriculture by encouraging growth in industrial and service sectors, which can provide better-paying jobs for surplus agricultural labour.

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INCREASE IN MINIMUM SUPPORT PRICES (MSP) FOR KHARIF CROPS 2024-25

Source: 

Down to Earth