Today's Editorial

Beyond Editorial:

What are the demands of the farmers?

• The headline demand in the farmers’ 12-point agenda is for a law to guarantee minimum support price (MSP) for all crops and the determination of crop prices in accordance with the Dr M S Swaminathan Commission’s report.
• Full debt waiver for farmers and labourers.
• Implementation of the Land Acquisition Act of 2013, with provisions for written consent from farmers before the acquisition and compensation at four times the collector rate.
• Punishment for the perpetrators of the 2021 Lakhimpur Kheri killings.
• India should withdraw from the World Trade Organization (WTO) and freeze all free trade agreements.
• Pensions for farmers and farm labourers.
• Compensation for farmers who died during the Delhi protest, including a job for one family member.
• Electricity Amendment Bill 2020 should be scrapped.
• 200 (instead of 100) days’ employment under MGNREGA per year, the daily wage of Rs 700, and the scheme should be linked with farming.
• Strict penalties and fines on companies producing fake seeds, pesticides, fertilisers; improvements in seed quality.
• National commission for spices such as chilli and turmeric.
• Ensure rights of indigenous peoples over water, forests, and land.

Are the demands of the farmers justified?

• A legal guarantee for purchasing crops covered under the MSP regime will require setting aside huge funds for it.
• The total value of crops under MSP is estimated at 10 trillion, and government procurement of all these crops may distort market dynamics.
• Prices of commodities are based on demand and supply, and the legal guarantee of MSP is simply not feasible in a free market.
• Accepting the farmers’ demand for free electricity would promote unsustainable farming practices and may result in the depletion of groundwater resources.

Minimum Support Price (MSP):

• The MSP for a crop is the price at which the government is supposed to procure/buy that crop from farmers if the market price falls below it.
• MSPs provide a floor for market prices and ensure that farmers receive a certain “minimum” remuneration so that their costs of cultivation (and some profit) can be recovered.
• During each cropping season, the government announces minimum support prices for 23 crops -
• 7 types of cereals (paddy, wheat, maize, bajra, jowar, ragi and barley),
• 5 types of pulses (chana, arhar/tur, urad, moong and masur),
• 7 oilseeds (rapeseed-mustard, groundnut, soyabean, sunflower, sesamum, safflower, nigerseed),
• 4 commercial crops (cotton, sugarcane, copra, raw jute)
• The government largely bases its decision on the recommendations of the Commission for Agricultural Costs and Prices (CACP).
• Also, MSPs have no statutory backing — a farmer cannot demand MSP as a matter of right.
• The farmer unions want the government to enact legislation conferring mandatory status to MSP rather than just being an indicative or desired price.

How can MSP be guaranteed?

There are two conventional ways -

• The first is to force buyers to pay MSP.
• Sugar mills are required, by law, to pay cane growers a “fair and remunerative” or “state advised” price within 14 days of purchase.
• But this approach risks implementation hurdles (recurrent cane payment arrears are proof), or worse, the private trade choosing not to buy at all.
• The second is for government agencies to buy the entire marketable produce of farmers offered at MSP. That is unsustainable, both physically and fiscally.

But there’s a third option:

Price Deficiency Payments (PDP):

• It entails the government not physically purchasing or stocking crops and simply paying farmers the difference between the market price and MSP if the former is lower.
  • Such payment would be on the quantity of crop they sell to the private trade.
• Case of Madhya Pradesh - Bhavantar Bhugtan Yojana
  • Under this scheme, the market price for a crop was its average modal (most-quoted) rate in the Agricultural Produce Market Committee (APMC) mandis.
  • The price difference vis-à-vis the MSP was payable on the actual quantity sold by the farmer, backed by an “anubandh patra” (sale agreement with trader), “tol parchi” (weighment slip), and “bhugtan patra” (payment letter signed by both parties).
  • It was implemented during the 2017-18 kharif season for eight crops: urad (black gram), soyabean, maize, arhar (pigeon pea), moong (green gram), groundnut, sesame, and nigerseed.
  • Despite 21 lakh-odd farmers registering and payments of about Rs 1,952 crore being made, the scheme couldn’t be continued for lack of Central support.
• A model in Haryana - Bhavantar Bharpai Yojana (BBY)
• BBY operates on the Haryana government’s ‘Meri Fasal, Mera Byaura’ portal, in which farmers have to register themselves.
• On grant of registration, post “girdwari” (crop area verification) by revenue/ agriculture department officials and satellite imaging, the farmer is eligible to obtain MSP via BBY.
• It is being implemented mainly in bajra (pearl millet), mustard, and sunflower seed, although it also covers groundnut, chana (chickpea), moong, and 16 vegetable and 3 fruit crops.
• Haryana has opted for a mix of both physical procurement and PDP under BBY.
• If the difference isn’t too large, procurement is done to push up the market price closer to MSP and cover the rest through PDP. If it is too high, then only PDP.
• Also, farmers are being paid not on actual production but the three-year average yield for their block/ sub-district with lower and upper caps.