Farmers Protest And MSP

Farmers are on the roads once again with their demands. In 2020-21. they had protested for the revocation of three farm bills passed by the parliament. This time they have a long list of demands and most of the protesting farmers are from Punjab and Haryana region. The fulcrum of the protest is the MSP. 

The list of demands is very long, some of them are-

1. Legalise MSP and expand it to all crops.
2. Pension to farmers and agricultural labourers after 60 years of age. (10000 Per month)
3. 200 days of guaranteed employment under MGNREGA and a wage of 700 per day
4. Implement MS Swaminathan Report.
5. Withdrawal from WTO and other FTA.
6. Loan waiver of Farmers.
7. Free electricity up to 300 units.
8. Allow stubble burning.

Why only limited places?

Both the protests have one thing in common, protesting farmers are from the same region i.e. Punjab, Haryana and western UP. It is not just due to one reason but a mix of others.

First is the political reason. Punjab was granted separate statehood in 1966. It is for the contribution of Sikh forces in the India-Pakistan war 1965. A regional party has its hold over Punjab. The result was not as per the wish of the national party. It led to the experimental era in Punjab. The other is the ignorance of the demand for separate land in the form of Khalistan. It led to the negligence of development activities.

The GREEN REVOLUTION impact. In the 1950s and 60s, India was facing the problem of food security. The Green Revolution was started in 1966. The aim was to meet food grain requirements and become self-sufficient in food grain production. It produced the desired result but the cost was very high. It is not due to the idea but to the implementation. The ecology of Punjab is not suitable for paddy cultivation due to the non-availability of fertile plains and irrigation facilities.

Had it been started in the fertile plains of Bihar and West Bengal, it would have given more results without damage. The reason was to get political support. Due to the support of central and state governments, there is growth of big and small farmers. They have surplus production of wheat and rice. Now that became a marketable surplus and farmers started making handsome money after selling it to the government under MSP and procurement price.

Farmers started monocroping and developed their infra to support just two crops paddy and wheat. They become so comfortable that they are not ready for crop diversification. As the central government is pushing for crop diversification they fear for their loss in wheat and paddy cultivation.

 The MSP debate

Let us understand the MSP in detail and why focus on MSP. MSP stands for Minimum Support Price, It is the lowest price at which the government will procure the listed crops. Historically the purpose was to support the farmers when there was no buyer above MSP and support crop diversification. It was the procurement price at which the government used to purchase. MSP came into the main play after the government discontinued procurement prices. MSP was started in 1966 with the establishment of FCI and CACP. Till 2005 there is no rule to calculate MSP. The government used to declare by itself. From 2005-2017 there is no law to give MSP. In 2017, it was decided to give MSP @ A2+FL+50%A2.

This is the formula to calculate MSP. There are three formulas suggested to calculate MSP. 

1. A2– Any cost paid by farmers to outsiders like wages, and fertilizers. seed cost etc.
2. A2+FL– Cost paid to outsiders plus the value of family labour.
3. C2– It is called comprehensive cost. It includes A2+FL+ interest on fixed capital investment+rent of the land.

MS Swaminathan’s committee recommended C2+50%ofC2. Farmers are demanding for this formula of MSP. MSP alone is not going to benefit farmers at all levels. It is to be noted that 86% of farmers in India are small and marginal farmers who have less than 2.5 hectares of land and 96% of farmers have less than 5 hectares of land. These farmers are small farmers they have no marketable surplus and most of them are not selling under MSP. It is only 4%farmers which get benefit from MSP. Most of these farmers are in Punjab, Haryana and Western UP region.

The high concentration of APMC mandi and marketable surplus of even small farmers of these regions led to the emphasis on MSP. 

MSP is declared on 22 crops but 64% of MSP is on wheat and rice which is the main crop of Punjab and Haryana. 

Feasibility

There are environmental, economic, fiscal and international challenges in fulfilling the demands. Demand for allowing stubble burning will have an environmental impact leading to air pollution. Offering high MSP and legalising it will create ecological problems. As per informal reports Punjab and Haryana go dry in 10-15 years due to its faulty agricultural practices and monocropping. The water requirement for paddy cultivation is very high in Punjab. It is much less in Bihar and Bengal. We are also exporting water in the form of rice export.

Economically the first problem is the calculation of C2 price. the second is due to high MSP, there is inflation in edible products making it difficult to meet the equilibrium. Loan waivers and free electricity will add a burden to already stressed fiscal positions. Remember that 86% of the farmers are small and marginal and mostly consumers; inflation will hit them hard. Higher MSP will make things costlier making input and living cost higher.

IF not MSP then what?

MSP is to support the farmers in distress. MSP is to drive crop diversification as needed. We need a comprehensive approach to make farming profitable at all levels. Being an agri-based economy we are not self-sufficient in food grains. India imports edible oil and pulses. The need is to target crops according to ecology. Development of irrigation facilities, connecting with the market and giving proper information to farmers about weather, soil and nutrient requirements. Research and development in seeds, techniques of production, investment in agri infra for farm-to-fork connectivity. Supporting and handholding farmers in increasing productivity by using modern techniques. Increasing the formal sector loan facilities. Improving post-harvest management to reduce loss. Better irrigation techniques which are environmentally friendly like drip irrigation and sprinkle irrigation.

Conclusion

The major problem in agriculture is that there is no proportionate increase in income to cost and benefit is not pervasive leading to inequality. India is an agriculture-based economy and nearly half of the population is dependent directly or indirectly on agriculture. It will act as a growth driver. The focus should be on small and marginal farmers in augmenting their income. It can be done by promoting animal husbandry along with farming. To bring equality the rich farmers need to be taxed. Rationalise MSP with the aim of crop diversification and food security. Promote ecologically suitable crops like millets. Environmental and economics both should interplay a key role in decision-making. Research and development are missing that need to be improved. Education and awareness among farmers to make them profitable are some future courses of action.

Divyanshu Vishen

_{(Views expressed are personal)}