MSP hike for Kharif crops

Kashmir Times. Dated: 10/6/2018 3:40:00 PM

Mere higher MSP does not translate into better returns for farmers when inflation on farm equipments is adding to input cost of crops

Announcement of another hike in the Minimum Support Price (MSP) for several crops in the Kharif season close on the heels of farmers' agitation in the capital, the BJP-government has faultered in tackling the issues faced by the farm fraternity in the country. Besides, hike in Rabi crops approved by the central government within months of the previous hike is unlikely to translate into better returns for the farmers when the farm equipment has become costlier and input costs for all sorts crops is increasing with the passage of every year. But, however, the shift in the conception of the government towards the farmers marks a change in cautious approach adopted by the BJP-regime in raising the MSP during the first half of its tenure. In fact, the threats by the farmers for a renewed agitation have been bothering the rulers of the day with multiple problems. Moreover, the approaching election year appeared to be tough for the ruling right wing party and the latter wanted to make some amends in getting the support of the farming fraternity in the country. The farmers have been angry and spewing venom against the rulers for not paying adequate attention to their problems caused due to high inflation on farm equipments leading to higher input in crops coupled with declining returns from the market. The sugarcane farmers have also been up in arms due to non-payment by sugar factories on their produce during the past few years. It was also on Wednesday this week that the BJP-government woke up from a deep slumber and announced a special package for sugar industries worth Rs 22,000 crores for clearance of due to the farmers, who have been waiting for the past many years. The latest hikes are generous, even if they are moderate compared to those fixed for the Kharif crop. By way of comparison, the highest increase over the previous Kharif season's MSP was 52.5 percent for the cereal ragi. Now the highest season-on-season hike for the Rabi crops is 20.6 percent for safflower. The MSP for wheat has been raised 6.1 percent, or Rs 105 a quintal. For mustard, gram and masur dal, the increases are between 5 percent and 5.3 percent. The government says that with these prices, it has delivered on its promise that farmers will get a price at least 150 percent above their cost of production, and that their incomes will be doubled over time. The Rabi crop will be sown in November, by which time Madhya Pradesh and Rajasthan (large producers of wheat and mustard, respectively) will be firmly in campaign mode. The BJP, which has to deal with anti-incumbency in both these states, has faced some flak over the Madhya Pradesh government's handling of farmer agitations. Clearly, it is now riding on the hope that the new MSPs will bolster its farmer-friendly credentials and further its prospects at the hustings. Moreover, the rulers feel that these steps will definitely help in garnering more votes than before.
It is a coincidence that the hikes were announced a day after thousands of angry farmers descended on New Delhi, stopped only by the use of water cannons and teargas. This is the latest in a long list of instances that signals the existence of underlying agrarian distress in the country. But it is not merely the lack of adequate prices for farm output that has led to unrest - the rise in costs of inputs such as fertilizers and diesel is also a reason for this. India's farm sector has multiple stress points, and ground-level procurement often does not take place at stipulated support prices. Barring paddy and, to a lesser extent, wheat, the MSP formula doesn't work for most crops in the absence of substantial direct procurement by the government agencies. Market prices for cotton are currently close to the MSP, but this is largely because of traders betting that export demand will rise due to the on-going US-China trade war. A robust and permanent mechanism that actually helps farmers get the declared MSP for a crop is being pursued through a price deficiency payment scheme and a private procurement plan. But this is still in a nascent stage and is not adequate. There is need for a holistic reboot of the agriculture sector, particularly to address the restrictive trading policies and excessive government interventions that deter productivity enhancements. There also has to be a permanent mechanism to address the issues of the farmers.



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