Vegetable price volatility leads farmers' demand for legal status for MSP

The persistent demand for a minimum support price (MSP) for farmers has gained renewed vigour, driven by recent fluctuations in vegetable prices, particularly tomatoes and onions. While this demand has been a longstanding issue, the current challenges faced by farmers have given it added urgency.

Tomato prices, in particular, have surged to unprecedented levels, rendering them unaffordable for middle-class consumers and even multinational fast-food chains. Ironically, this surge has failed to benefit the very farmers responsible for the harvest, as they find themselves disposing of their produce by the roadside owing to meagre returns from wholesale markets and large retail chains. Buyers, in their defence, have cited an 'oversupply' that exceeds market demand.

Farmers in Haryana have been at the forefront of this movement, demanding that the state government procure sunflowers at an MSP of Rs 6,400 per quintal. Under the Bhavantar Bharpai Yojana, a government scheme designed to offer price difference payments, interim support of Rs 1,000 per quintal was extended for sunflower crops sold below the MSP.

On the onion front, India's vast cultivation area of approximately 19.4 lakh hectares yielded a staggering 316.8 lakh tonnes of onions in the agricultural year 2021-22, with estimates for 2022-23 projecting production at 310 lakh tonnes. Maharashtra continued to dominate onion production, accounting for 40.7 per cent of the nation's total output, followed by Madhya Pradesh with a 16.6 per cent share.

The MSP, integral to the government's agricultural price policy, is the rate at which the government commits to purchasing farmers' produce during the season. While intended to stabilise production and control consumer prices, farmers nationwide have faced challenges in selling their produce at current MSPs.

“Delays in establishing procurement centres, exploitation by commission agents who often purchase below the MSP, and a lack of awareness among a substantial segment of farmers have compounded the issue,” said farmer leaders leading the protests in Haryana and other states.

Farmers are now calling for a 'legal status' for the MSP, insisting that the government, at both the central and state levels, develop an 'assured market mechanism' to ensure that the MSP is more than just a paper promise.

With this agricultural season being the last before the Lok Sabha elections next year, the issue carries significant political and economic implications. Critics argue that the annual MSP hikes fall short of addressing the deeper problems within the agricultural sector and the pricing mechanism itself.

In 2018-19, government data indicated that the average farm household earned Rs 10,218 per month, nearly matching the national per capita income of Rs 10,495 per month for that year. This has led to the stark realisation that, on average, non-farm households in India fare better economically than farm households.

While the Reserve Bank of India forecasts inflation for the 2023-24 financial year at approximately 5.1 per cent, potentially surpassing the MSP growth rate, concerns persist that MSP increases continue to lag behind inflation.

As a response to these challenges, recommendations have surfaced to revise the MSP calculation method. These proposals advocate factoring in additional costs, such as the imputed rental value of owned land and transportation expenses for produce.

However, these recommendations have yet to be implemented, leaving farmers across the country to press for meaningful reform and financial security in a volatile agricultural landscape.