Policy on agri markets after taking views of states
NEWDELHI: The NDA government will frame a policy in consultation with states to “intervene” in agricultural markets whenever prices of farm produce plunge below federally fixed minimum support prices (MSPs), agriculture minister Radha Mohan Singh said on Friday, articulating a plan to alleviate one of the main causes of agrarian distress that could have serious electoral implications for the government.
To follow through on a key budget proposal promising 50% returns for 23 crops and compensation for market losses, the Centre will hold a meeting with all states in the first week of March, Singh said in an interview. Letters have already been sent out to all chief ministers, he added.
Prices of key commodities falling below MSPs – a floor price to prevent distress sales – led to a wave of protests last year by farmers in many states, including some large ones ruled by the BJP. To fix 50% returns, the Centre will use a “prevailing method” called “A2+FL” to calculate cultivation costs; this includes all out-of-pocket expenses of farmers plus the value of family labour.
Farmer organisations have been demanding the use of a more complete measure called “C2”, which includes imputed costs of capital and rent on land.
NITI Aayog, the government’s policy think-tank, and the agriculture ministry will discuss the details with the states when they meet, Singh said.
“There are two, three models being studied. Essentially the broad policy will be that if prices fall below MSP, then there will definitely be government intervention to ensure that farmers are compensated adequately in accordance with the notified MSP,” Singh said.
NEW DELHI: The Modi government has announced a series of steps to alleviate farm distress, promising profitable prices for farmers after a wave of protests in many states. The agrarian crisis could affect the electoral prospects of the BJP in several states where it is in power, despite farm loan waivers. In an interview with Zia Haq, agriculture minister Radha Mohan Singh listed the government’s plan to address the issue. Excerpts:
Farmers have demanded a comprehensive measure of costs called ‘C2’ to calculate 50% profits promised in the Budget. What measure of costs will the government settle on?
The government will set MSP at 1.5 times the cost of production, so that there is minimum of 50% profit over cost of production based on the prevailing method used by the Commission on Agricultural Costs and Prices. By this, all the paid out costs of the farmers, both in cash and kind will come to be taken into account.
Further, imputed value of the family labour will also be accounted for. The CACP is free to recommend profit margin even beyond the threshold level of 50%, as it deems appropriate. With a minimum of 50%, all notified crops will stand to benefit. In particular, millets and oilseeds will benefit, bringing advantage to rain-fed farmers. The National Farmers’ Commission too had suggested 50% margin on the cost of cultivation.
Unless there’s actual procurement or buying of produce by the government, MSPs are at best notional.
The government is commithonouring ted to the notified MSPs. In the earlier years, governments have only notiMSPs, fied the without proback viding for a up procurein ment except a few cases like wheat and paddy. Our government has been focusprocurement ing on of multisuch ple crops as pulses, oilcotton seeds and as seen in last 2-3 years. It is worth tioning that proement of pulses, eeds and cotton ring years 14-18 has regised an increase of 5% in quantity ich is worth 417% es more in terms alue as against 1-14.
The budget has omised a mecham soon to ensure mers will be mpensated for arket losses. hat mechanism e you zeroing in The Niti Aayog and
the ministry of agriculture will be working on various procurement interventions. There are two, three models being studied. Essentially the broad policy will be, that if prices fall below MSP, then there will definitely be government intervention to ensure that farmers are compensated adequately in accordance with the notified MSP.
Various alternatives, including that adopted by Madhya Pradesh will be examined for this purpose. Niti Aayog and ministry of agriculture are jointly holding a meeting in March first week with all the states to discuss alternatives. I have already written to all the chief ministers in this regard. We need the states to partner with us in this initiative to support the farmers, in monetizing their produce suitably. However, our primary aim is to create an efficient market structure in the country, such that farmers get remunerative prices which are above MSP. MSP based procurement should be seen as a fall back mechanism, whereby, the farmers are sure of getting at least MSP for their produce, particularly when markets fail.
MSPs are announced for only 23 crops. Farmers grow many crops for which MSPs aren’t even fixed. For example, vegetables. What about them?
In case of crops for which MSPs are not notified and if such produce forms more than 10% of a state’s agricultural output in the previous year and if prices in the market fall below a certain level, then Government shall intervene through ‘Market Intervention Scheme’ (MIS). Our Government has by amending the Guidelines raised the limit of procurement to 20% of the state’s annual estimated production from the earlier limit of 10%.