Why in news?
Commission for Agricultural Costs and Prices (CACP) has recommended making access to MSP of crops a legal right of farmers.
What are the benefits?
- The government recently approved a hike in MSP (minimum support prices) for kharif crops.
- The objective is to offer MSP at 50% higher than the cost of production.
- This exercise would get a legal backing with the suggestion of 'Right to Sell at MSP'.
- It would help ensure crops are not purchased below fixed price.
- The move would also instil confidence among farmers.
What are the concerns to be addressed?
- Procurement - Access to MSP alone would be insufficient, given the procurement system shortfalls.
- The present open-ended procurement-based system is less likely to be the appropriate way.
- Evidently, despite expansion, it has not reached producers satisfactorily.
- This is an inherently loss-making mode of price support.
- Relevance - It is relatively more beneficial to big farm owners with marketable surpluses.
- The ill-effects of the system are price distortions and skewed cropping patterns.
- Also, the piling up of stocks of food grains, such as rice, wheat and even pulses, which are difficult to offload.
- Marketing - Post-harvest price crash is chiefly due to market infrastructure inadequacy and inefficiency.
- So unless agricultural marketing is reformed, farmers would continue to be exploited by
- middlemen in the mandis run by the Agricultural Produce Marketing Committees (APMCs)
- traders in rural haats (informal local markets)
- Mandis - The network of mandis has not grown in proportion to agricultural production.
- Nearly 80% of small and marginal farmers dispose of their produce in village haats due to absence of mandis in their vicinity.
- This year’s Budget proposal of upgrade for 22,000 haats with proper link roads is a welcome move.
- But it has kept them outside the purview of the APMC Acts.
What are the alternatives?
- CACP and NITI Aayog have proposed alternatives to procurement-based market support.
- A better option is the price deficiency payment scheme introduced in Madhya Pradesh and few other states.
- Under this, only the price loss is reimbursed directly to the farmer.
- It is done without affecting rest of the market dynamics.
- It is found to be cost-effective and has been recommended by CACP for pan-India adoption.
Source: Business Standard
Quick Facts
CACP
- The Commission for Agricultural Costs and Prices is a panel under the Ministry of Agriculture.
- It makes recommendations for MSPs for 23 kharif and rabi crops.
- Its suggestions are not binding on the government.
