Farmers in India Dread MSP

The Minimum Support Price (MSP) for agricultural produce is a misnomer, and remains apathetic towards farmers.

The farm loan waiver saga is diffusing rather nimbly across India. Alongside this are farmer suicides, which continue to challenge the government’s ability to elevate agriculture to the importance of mainstream sectors like production, manufacturing, financial services, and technology. Agriculture has always been pushed back as a non-priority, whichever the government. MSP that takes care of farmers’ crop pricing in case of severe price depreciation, has been ineffective in supporting continuous farm output, farm loan repayments, and subsistence level of farmers in business. What then is the future of farmers, their livelihoods, their motivation to remain in farming? Future of famers remains bleak and unpredictable, as much as monsoons and inevitable climate change happen across the globe.

The intent of MSP is to safeguard farmers from below-cost remuneration; hence when price declines below MSP, government agencies pitches in to purchase crops at MSP. However, in contrary to crops acquiring their price through open market, they are fixed by the government as MSP, negligently unaware about the practical problems of farmers. Ironically, the government also ignores the fact that its support to farmers through MSP could, in disguise, be triggering a constant ‘pushing down’ of actual crop price, otherwise achievable when freely traded.

This aside, farm loans are more of a psychological burden to farmers than financial. Farmers committing suicides due to inability to repay loans as low as INR 1 lac shows the government’s straightforward wilful mismanagement. Government’s idiocy is amplified when it hikes the MSP for paddy 29 times since 1970, but government employee salary 120-150 times. In fact, when farmers fulfil food produce quota for the country, it saves direct food imports, reducing government expenditure. They must, on the contrary, be adequately compensated.

It is a fact that though corporate and rural debt are large in value, they cannot be equated at this juncture. The sectors suffer from different problems, and they need unique solutions. An inclusive, ethical, sector-specific attention and treatment is immediately necessary, for if the agriculture sector continues to be ignored, as the main revenue generating sector, there is high probability that it will fall prey to complete eradication. Excess food imports and erosion of government revenue would be the results.

Farm profits in India are effected by several supply chain dynamics. Unevenly distributed and minimum beneficiaries of crop insurances (Pradhan Mantri Fasal Bima Yojana), the extraordinarily high number of illegal commission agents, and the hierarchy of cartels before the agricultural produce reaches consumers, lack of subsidies for underperforming crops, and lack of farmer education, when policing financial inclusion.

Solutions lie within the system. ‘Farm loan waivers’ cannot be the solution in an economy like India, where agricultural production must drastically increase every quarter, with the growing population and family dependents in a rural (or urban) household. Instead, there is a need to educate farmers and agriculturists to save and invest their income, in order to live in peace. This, apart from government initiatives to regulate MSP, so that farmers can sell crops at reasonable prices, to reap a profit. Alternatively, free market access to commodities and trade, along with education would raise farming standards too.

The government must realise the embryonic nature of agriculture as the foremost of essential sectors, and prioritize it beyond measure. MSP, currently, is part of a horror story that has neither helped to alleviate farmers nor regulate commodity prices.

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