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Area planning — an alternative to MSP

One of the major tragedies of 2016-17 is the lower prices of agricultural commodities, especially vegetables.

Area planning — an alternative to MSP


SS Sangwan

One of the major tragedies of 2016-17 is the lower prices of agricultural commodities, especially vegetables. It is largely attributed to the adverse impact of demonetisation in November-December 2016. But it may not entirely be seen as an isolated phenomenon as the prices of agricultural commodities are witnessing a downward trend since August 2014 as per the Annual Report of Ministry of Agriculture, Government of India. 

The prices of pulses, oilseeds, maize, etc have gone even below their declared minimum support prices (MSPs) whereas the same were much higher before their harvest. The MSP policy has been in vogue for agricultural crops since the 1970s for wheat and paddy. At present, MSPs are announced for most of the crops. However, an effective network for purchase at the MSP of the total marketed surplus is still limited to wheat and paddy and that too in Punjab and Haryana. A few other states have started partial purchases of these crops in recent years. 

It is to be noted that wheat prices in Uttar Pradesh, its largest producer, have always been about Rs 200 less than the MSP. Sugarcane has also been getting not only the MSP but much higher. State advised prices (SAPs) have resulted in the inability of mills to pay in time. All other crops have no effective purchase system, except that some paltry purchases are made by states after hue and cry by farmers. 

Even the Shanta Kumar Committee on Issues related to Food Corporation of India (2015) emphasised on purchasing wheat and rice as per the demand of the government instead of all clearance of marketable surplus at MSP. It indicates the need to look for other options the world over to support farmers. 

Why area planning

Our basic needs of food, water, fuel, clothing and shelter must be met from the land, which is in limited supply. Over the years, farmers have made plans season after season, deciding what to grow and in how much area. Their decisions are made according to their own needs, their limited knowledge of land and technology, labour and capital available. 

In the allocation of area under crops, largely produced for market, ceteris paribus, the price received by farmers in the previous year has been one of the main factors in their decisions.  Owing to large size of the area and the number of people involved, the complexity of the problem increases and so does the need for information and rigorous methods of analysis and planning. The production objectives may be set by demand, social or political imperatives and the existing situation in the country. 

Examples of unwise land use include adoption of unsustainable systems of farming on poor soils and haphazard use for residential and industrial purposes which produce pollution and destroy the landscape too. Within agriculture, if some commodity, say potato, has been produced in excess of demand, then its prices are bound to crash, hitting the farmers. And if the government purchases, it will impinge on all taxpayers. 

Moreover, scarce resources of land, water and fertilisers have already been spent in surplus production which may have been avoided in area planning. Acreage restriction may sometimes require compensation to farmers for keeping a portion of their land vacant which may be a better alternative than the subsequent requirement of the MSP. As population and aspirations increase, land becomes an increasingly scarce resource. 

The challenges

But area planning/restriction under crops is a huge challenge in the democratic system. At the national level, an estimation of total demand of agricultural commodities has to be made in advance of their sowing season. Then that demand may be divided among the states in proportion of their acreage under the crop concerned in the last five years or so. The state may subdivide the demand at the regional level again in view of the previous situation of the districts. District officials may advise the farmers to dovetail their acreage as per allocation received from the state. Thus, planning of land under crops and other agricultural allied activities may enable the optimum use of other resources too and it may keep the prices in check with production as per demand.

But putting this idea in practice is a huge challenge. It, first, requires that the need for area planning to prevent some unwanted production may be accepted by the farmers; and second, there must be the political will to put the plan into action. For achieving effective farmers’ participation in area planning, the planners may invest time and resources in making convincing estimates, engage in local discussions through media, workshops and extension services. During a recent survey for protected cultivation in Haryana and Punjab, some farmers gave suggestions for controlling production under different crops. 

It may not be impossible for India to give a thought to area planning as an alternative  to the MSP, just as the USA, Australia and the UK have adopted it largely.


Area planning the world over
Area planning is the alternative mechanism adopted by some countries such as the US, Australia, and the UK. 

1  In the UK, all farms above 5 hectares have to get approval for use of land not only for growing crops but also for erecting buildings, carrying out excavations and engineering operations needed for other agricultural allied activities. 

2  In Australia, the departments of agriculture and food have to provide information and advice to the Australian Planning Commission and local governments to ensure their strategic planning processes at farmers' level for the continued growth of agriculture as per demand. 

3  In the US and Australia, their zoning process regulates the types of activities that can be accommodated on a given piece of land, as well as the amount of space devoted to those activities. Subsidies are also linked to area allocated under a crop. 

4  In India, contrary to this type of elaborate exercise, our Department of Agriculture and Horticulture are generally setting targets of production higher than the previous year on the thumb rule of 10 per cent or so.  


The writer is Professor SBI Chair, CRRID, Chandigarh

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