Agriculture

KEY POINTS

·         The Government of Maharashtra (GoM) has made buying at MSP mandatory in the state for traders.

·         In case the order is not observed, the licence of the trader will be cancelled, a fine of Rs 50,000 imposed and he must serve a jail term of one year.

Challenges

·         If supply exceeds demand, market prices will tend to fall, possibly below MSPs.

·         Then, it would be very difficult for traders to sell the products and incurs huge losses.

·         No rational businessman would do that unless the government promises to compensate losses.

·         If the neighbouring states like Karnataka, Madhya Pradesh and Gujarat sell the same crops at prices below MSP, then Maharashtra’s traders may move to the adjoining states and buy at market prices.

·         In that case, the GoM becomes the buyer-of-last-resort, resulting in a de facto takeover of the wholesale trade.

·         Also, if the GoM doesn’t have ample resources and storage to buy all that comes to market of all MSP crops, farmers will be left in a lurch as traders will not be there to buy.

·         It may lose the trust and patience of both the farmers and traders.

Way ahead

·         The best way to deliver a better deal to farmers is to “get the markets right”.

·         Treat farmers as businessmen and facilitate a conducive environment for them to flourish.

·         Give them access to national markets. Reform archaic laws like the Essential Commodities Act (ECA) 1955 and APMC Act. 

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