Right to Sell at MSP

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

1. middlemen in the mandis run by the Agricultural Produce Marketing Committees (APMCs)
2. 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.