What is the issue?
The newly released Minimum Support Price (MSP) for crops has some problems.
What is MSP?
- Minimum Support Price is the price at which government purchases crops from the farmers.
- Commission for Agricultural Costs and Prices (CACP) recommends Government of India to fix MSP before sowing season.
- The objective of the MSP is to ensure remunerative prices to the growers, by encouraging higher investment and production.
- At present, the MSP covers 24 crops, which includes cereals, pulses, oilseeds, copra, raw cotton, raw jute and tobacco.
What are the concerns with present MSP?
- Market prices of some crops have gone below the MSP which could discourage sowing.
- Except in the case of paddy and wheat, minimum support price has yet to offer remunerative prices.
- The government's pricing policy for the 2017 kharif crops might worsen the farmers demand.
- The new MSPs for major kharif crops are only marginally higher than those of the previous season.
What makes the new MSPs worse?
- For cotton, moong and sunflower seed MSP is lower than the actual expenses incurred in cultivation.
- Farmers are staring at a net loss in the coming season.
- Low increases in MSPs ease their distress.
- Overall value of farm produce has also been on a slide for several years.
- The costs incurred by farmers on inputs such as seeds, fertilisers, pesticides and labour are rising faster than the prices of their produce.
How this issue can be addressed?
- Government need to provide Procurement support to the farmers.
- Government can fix support prices at 50% above actual costs.
- Effective and successful market intervention based MSP to other crops should be considered.
- The “price deficiency payment mechanism” mooted by a task force of the NITI Aayog should be implemented.
- Trying out such a setup on a pilot basis would be a reasonable starting point.
Source: Business Line
