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Posted at: Jul 10, 2018, 12:04 AM; last updated: Jul 10, 2018, 12:04 AM (IST)

MSP — Unfair to farmers in food bowl states

The input costs of only chosen farmers are considered to decide the MSP. This is unfair to the farmers of the 'Granary of India' as their input costs are much higher than those of farmers from the rest of the country.
MSP — Unfair to farmers in food bowl states
No Gain: The MSP cannot bring the farmers out of the crisis.

Manjit S Kang

Adjunct Professor, Kansas State  University, Manhattan

In the Indian system, farmers are the only 'businessmen' who cannot set their own price for their products —foodgrains. Even a 'rehrhi-wala' sets his own price daily for whatever he sells, but farmers cannot do so.  They have been lulled by the Central government into accepting whatever price the government decides to give them. For the sake of food security, the Central government decided to purchase the two main food staples of India's majority of people — wheat and paddy — at a minimum support price (MSP) for each commodity. 

The MSP has been increasing only incrementally, barely to keep pace with inflation. For example, the MSP offered for wheat in 2007-08 was Rs 850 per quintal, which went up by Rs 150 the following year and by another Rs 80 in 2009-10. The figures for 2016-17 and 2017-18 were Rs 1525 and Rs 1625, respectively. For paddy (common), the government offered an MSP of Rs 1470 per quintal in 2016-17 and Rs 1550 in 2017-18 — a mere raise of Rs 80. The comparative figures for grade A paddy were Rs 1,510 (for 2016-17) and Rs 1,590 (for 2017-18). The ruling party at the Centre does play politics once in a while. For example, the paddy (common) MSP has been increased by Rs 200 for 2018-19 (Rs 1,750) and that for grade A by Rs 180 (Rs 1,770), in view of the upcoming Lok Sabha elections in 2019.

Politics aside, the MSP is grossly unfair to the farmers of Punjab, Haryana, and western UP — that are dubbed as the 'Food Bowl States' or the 'Granary of India'. This is so because input costs of only chosen farmers from around the entire country are averaged to decide on the  MSP. Input costs of farmers in the food bowl states are much higher than those of farmers from the rest of the country. Farmer union leaders, such as Ajmer Singh Lakhowal and Balbir Singh Rajewal, have, from time to time, protested this system of computing the MSP, pointing out that the Commission for Agricultural Costs and Prices (CACP) had not taken into consideration increased input costs for diesel, labour and fertilisers of this region.

Double whammy with spurious pesticides

Now, in the era of GST, there is an 18 per cent surcharge on agro-chemicals, be they real or spurious! According to the estimate by the Tata Strategic Management Group, annually Rs 2,500 crore worth of spurious chemicals are sold in India. Farmers are hit with a double whammy because the spurious agro-chemicals are ineffective and costly, and cause farmers to suffer significant yield losses. No MSP can compensate for these losses. 

Dangers of exploitative agriculture

For food security purposes, the government purchases only wheat and paddy, which is responsible for establishing the rice-wheat cropping pattern and consequent depletion of groundwater resources in the food bowl states. This has happened, in addition to water depletion, at the expense of crop diversification and soil health.  While addressing the Indian Science Congress at Varanasi in 1968, Prof MS Swaminathan warned about such a system, saying, "Exploitative agriculture offers great dangers if carried out with only an immediate profit or production motive. The emerging exploitative farming community in India should become aware of this.  Intensive cultivation of land without conservation of soil fertility and soil structure would ultimately lead to the springing up of deserts."  This is so true of the current situation in Punjab, where the adoption of the rice-wheat monoculture has caused an ecological crisis of great proportions. 

Estimates are that it takes about 5,000 litres of water to produce 1 kg of rice. Thus, Punjab is virtually exporting its precious water to other states in the form of rice and is not compensated for it in any shape or form. Punjab farmers have been contributing about 40 per cent to 50 per cent of wheat and 25 per cent to 30 per cent of rice needed for the public distribution system of India. Punjab has contributed much towards ensuring the food security of India and has paid a heavy price in depleting its underground water reserves. While the water table in Punjab used to be 20 feet in 1970, it has now gone down to more than 200 feet in some districts. If the current system of encouraging the rice-wheat monoculture continues, Punjab will run out of groundwater in the next 20 years. 

Govt should buy other crops 

It is not the incremental increases in the MSP that are going to save Punjab, but a change in policy, ie the government should purchase other crops that are in short supply and also consume less water than paddy. For example, pulses (which add own-manufactured nitrogen to the soil) and oil seeds, which we import. Many well-known agricultural scientists, such as Dr GS Khush, Professor Swaminathan and Dr SS Johl, have suggested that the area under paddy be reduced from the current 27 lakh hectares to 15 lakh hectares and the area vacated by rice be devoted to other needed crops. It will reduce the amount of rice straw produced, which is mostly burned in the fields, causing unprecedented pollution year in and year out.

Help farmers export grains

The government should also help farmers export foodgrains to other countries instead of letting them rot in open storage, called 'Cover and Plinth' or CAP storage. Spoilage of foodgrains under CAP storage is common in Punjab. Damage by rodents and fungi is extensive, which makes the grain unfit for human consumption.  Scientific methods of storing foodgrains, such as silos, are urgently needed.  The Ministry of Agriculture and Farmers' Welfare should take the lead in getting this done.  Exporting high quality foodgrains will not only increase farmers' income but also earn some foreign exchange for India. Because food security is a Central government subject, not a state one, the former should build silos to store grain. Farmers should be given a subsidy to develop on-farm grain storage facilities of up to 15 to 20 tonnes to keep some of their produce for sale at a price more remunerative than the MSP.

Farmers should become traders

Farmers need to become businessmen and become independent of the government. The MSP is a trap. Why is there no cap on products of other businesses? All other businesses can increase their prices at will. If the farmers are not able to reap profits from farming, they will continue to be in the grip of the agrarian crisis they are in now. 


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