Govt must implement Swaminathan Commission report to allay farmers’ anxiety

It seems the government has lost the trust of farmers. Instead of keeping its promise to expand the list of agricultural products under the ‘minimum support price’ (MSP) system to prevent distress sale of farm produce, the new farm laws threaten to abolish the practice that helped India to grow over the years as the world’s second largest food producer, after China.

Before the 2018 Karnataka legislative assembly election, the prime minister himself listed three more agricultural products as his TOP priority for price support. By TOP, he meant tomato, onion and potato which come under distress sale by their producers year after year while their market prices peak in the off season by several thousand percents with traders making huge profits.

India is the world’s eighth largest exporter of agricultural products. Domestic shortage also helps merchant exporters turn importers during crisis months. The practice goes on right under the nose of the government which do little for distressed farmers. Marginal farmers have been the worst suffers. Unremunerative prices and debt burden force hundreds of farmers across the country commit suicide almost every year. Aided by good summer rainfall this year, farmers fought the Covid-19 pandemic to grow record amount of agricultural products, but could not find enough good buyers due to lockdown and transport bottlenecks. In the retail market, TOP prices hit the roof.

A remunerative and stable price environment for farmers is very important for increasing agricultural production and productivity. On paper, the government’s price policy for agricultural commodities seeks to ensure remunerative prices to growers for their produce to encourage higher investment and production and safeguard consumers’ interest by making available supplies at reasonable prices with low cost of intermediation. The price policy seeks to evolve a balanced and integrated price structure in the perspective of the overall needs of the economy. The MSP system was evolved for this purpose. Currently, the MSP system covers some 25 major agricultural commodities in the crop seasons on the basis of the recommendations of the Commission for Agricultural Costs and Prices (CACP).

The latter also recommend ‘Fair & Remunerative Price’ (FRP) for sugarcane. The crops covered under MSP are: paddy, jowar, bajra, maize, ragi, arhar, moong, urad, groundnut-in-shell, soyabean, sunflower, sesamum, nigerseed, cotton, wheat, barley, gram, masur (lentil), rapeseed/mustardseed, safflower, jute and copra. In addition, MSP for toria and de-husked coconut is fixed on the basis of MSPs of rapeseed/mustardseed and copra, respectively.

The government is supposed to organise procurement operations of these agricultural commodities through various public and cooperative agencies such as Food Corporation of India (FCI), Cotton Corporation of India (CCI), Jute Corporation of India (JCI), Central Warehousing Corporation (CWC), National Agricultural Cooperative Marketing Federation of India Ltd. (NAFED), National Consumer Cooperative Federation of India Ltd. (NCCF), and Small Farmers Agro Consortium (SFAC). State governments also appoint their independent agencies to undertake procurement operations.

MSPs of kharif crops are supposed to be fixed at 50 percent profit or 150 per cent of production cost. However, this is not being done. The so-called TOP priority crops - tomatoes, onions and potatoes - are still to be included in the list of commodities under MSP. Incidentally, India is the world’s second largest potato grower, after China. And nearly 55 percent of the country’s potato production comes only from two states — Uttar Pradesh and West Bengal. Other key producers are: Bihar, Gujarat and Madhya Pradesh. These five states account for over 80 percent of India’s annual potato production.

Two years ago, TOP growers suffered heavy losses. Potato growers were estimated to suffer losses to the tune of Rs.30,000 crore as the market price crashed during the harvesting season.

Before the 2014 Lok Sabha elections, the prime minister had promised that if voted to power, his government will change the way MSP is set. It will follow a new formula — the entire cost of production plus a guaranteed profit of 50 percent which was one of the key recommendations of the 2006 M.S. Swaminathan Commission on farmers. The government wrongly claims that it has already implemented the key Swaminathan Commission recommendation. Agricultural producers’ bodies say that MSP for crucial crops such as paddy and wheat is only 12 percent and 34 percent higher than their respective production costs. For other products too, MSP is far lower than the price recommended by the Commission.

What is more, several states, including those ruled by BJP, alleged that the CACP calculated costs for agri-products under MSP are much lower than their actual production costs in those states. The idea behind fixing MSP is that the government will step in and purchase those farm products if their prices in markets fall below MSP. Unfortunately, this is also not happening. The government is not allocating enough funds to procurement agencies to make it happen. As a result, growers are forced to make distress sale of their products.

Before the new farm laws were brought in, a key demand of farmers’ bodies was the implementation of the Swaminathan Commission recommendation on fixing MSPs in letter and spirit. The farmers are agitated because the new farm laws ignored their demand. They fear that that the government may ultimately dilute or dump MSP.

The government attitude is inexplicable. Few will disagree that food is one of the most fundamental economic products. Only a small number of countries are actually lucky to excel in agricultural production. China, India, the US and Brazil are the world’s top four food producing countries. While China and India tend to use most of their food products to feed their own large population, the US has long been a superpower in food markets, as both consumer and exporter.

In India, only 10 of its 28 states and nine union territories produce enough crops to feed the nation. West Bengal is the biggest crop producer, followed by Uttar Pradesh, Punjab, Gujarat, Haryana, Madhya Pradesh, Assam, Andhra Pradesh, Karnataka and Chhattisgarh. The earlier the government accepts the just demands of the country’s farmers and provide the legal sanction, the better it is for the nation.