MSP announcement revives debate on who really gets the benefit

The announcement of MSP for kharif 2021 has got many demanding for a much higher price being fixed. With wheat and paddy growers being the major beneficiaries, there is a feeling of too little being done for non-paddy and wheat growers. Unfortunately these growers haven’t been cared for well enough.

MSP announcement revives debate on who really gets the benefit
Is the MSP sufficient enough for the non-paddy/wheat grower?

THE Union government announced the minimum support price or MSP for the ensuing kharif 2021 crop.

The idea of the MSP is to encourage farmers to produce a crop of their choice with the promise that if the market price of the said crop were to decline, the government through its procurement agencies will buy the produce at the MSP.

Old debate rekindled

Predictably, the old debate on the adequacy or quantum of MSP announced was sufficient or not was rekindled.

In poll-bound Punjab, for instance, Chief Minister the CM, Capt Amarinder Singh questioned the meagre ₹72 per quintal (one quintal =100 kilograms) hike in the MSP for paddy. The new MSP stands at ₹1,940 per quintal.

The new paddy crop will arrive in the market from November 2021 onwards.

Not just Punjab, farmers in Tamil Nadu’s Cauvery delta have also questioned the paddy MSP. The Hindu quoted Arupathy K, general secretary of the Federation of Farmers’ Associations of Delta Districts as saying that the MSP as per the Swaminathan Committee report was ₹2,590 per quintal (one quintal =100 kilograms).

Simmering anger

But many question this move of placating the paddy and wheat growers of the country.

“In case of wheat farmers of only five states enjoy the MSP while in case of paddy the MSP is beneficial to farmers of seven states. This is an inequitable system at work,” an economist who chose to remain anonymous, told TV9 Digital.

The economist even went on to say that the MSP was a vestige of the 1960s when food security was of primary concern.

“The intention of the MSP was to encourage farmers to grow more but now it has become a convenient tool because the farmer can sell at this price,” the economist added.

There is merit in this observation and that is borne out by the record procurement of wheat. The Food Corporation of India or FCI had already procured a record 405 lakh tonnes representing a 4% rise over procurement in the comparable period (data as of May 29, 2021).

Case of neglect

A source at the Federation of All India Farmers Association who spoke to TV9 Digital also regretted the neglect.

“The government can surely incentivise the non-paddy/wheat growers. We are chronically short in the production of oilseeds and pulses. Higher MSP for these crops will boost the morale of the farming community,” the source added.

For the record though, it needs to be mentioned here that the proposed MSP hike for kharif 2021 is the highest in case of sesame (til) which is cultivated for extracting oil. The MSP for sesame has been hiked by ₹452 per quintal.

A case of rotting produce

The produce procured by the agencies like FCI lies virtually unattended in its godowns. India’s wheat exports for instance have fallen consistently since 2012-13.

Year Quantity exported (in million tonnes)
2012-13 6.51
2018-19 0.23
2019-20 0.22
2020-21 2.09

A report by SPGlobal, a commodity research firm noted that India hadn’t been able to export a large quantity of wheat despite record domestic output. The inability was primarily on account of ruling high domestic prices compared to price quoted by other major wheat exporting nations.