A series of objections are frequently raised against the farmers’ demand for an MSP. The main article responds to the chief objection, that it is unaffordable. Here are responses to other major objections.
‘It is an impossible exercise’
Not really. The mechanisms laid out in the earlier section, and in the draft law prepared by the farmer organisations for guaranteed MSP, are all practically implementable. India has dealt with more complex entitlement frameworks like MGNREGA, involving 5.77 crore households and 14.33 crore workers (job cards), with works verified and payments made directly; 45.76 crore DBT transactions were undertaken in 2023-24 alone. All of this is only to illustrate that where there is a will, there is a way.
A guaranteed MSP is being portrayed as something that will unduly distort markets or as not accounting for market dynamics. That is not true. Several mechanisms to be used for its implementation are embedded into the existing market systems operating under supply and demand forces, including APMC mandis.
Moreover, it is well understood that agricultural markets by their very nature are not amenable to pure free market economics. Especially in India, crores of small and marginal farmers are at a major disadvantage in the market against the agri-business companies and traders. All countries have mechanisms to correct for the vagaries of the market and protect the interests of their farmers.
Global agricultural markets are already rigged and distorted through complex camouflaging of ever-increasing subsidies to farmers and agri-corporations by the developed world. The dumping of such produce in Indian markets and the Indian government’s own actions such as export bans and import policies distort the market against the interests of the farmers. The MSP and market intervention mechanisms should be seen as essential corrections to the market to ensure a minimum degree of fairness to the small and marginal farmers.
‘Food will become unaffordable if MSP is legally guaranteed’
While legally guaranteeing an MSP, the government can ensure that farmers’ interests overlap significantly with poor consumers’ interests. Expanding the food/nutrition security basket for poor households to include pulses, oil, and millets would expand the procurement of these crops while ensuring MSP. It is important to note that the largest number of rural consumers are farmers and their households, and hence ensuring higher income to producers goes a long way towards reducing the number of low-income consumers.
The system we propose allows the government to choose different mechanisms for different crops and different situations. Where market intervention would provide a necessary and desirable correction, that can be the preferred mechanism. In a crop where the government is concerned with food inflation, the price deficiency payment system can be used.
Finally, Indian farmers have suffered for too long with net negative subsidies and negative terms of trade in order to protect industry or consumer interests. It is important that the food producers be addressed now. Sure, the government should ensure affordable food to poor and low-income households, but through a robust food security system. The burden of keeping prices low should not be borne by the farmers alone.
‘It will impact India’s export competitiveness in agri produce’
India exports only 7-8 per cent of its total agricultural produce; the largest markets are domestic markets. Moreover, India’s contribution to global agricultural export is only 2.5 per cent. Thus, there is no question of poor consumers elsewhere being denied cheap food either.
For commodities like paddy, where up to 45 per cent of the total production is procured at MSP, there is no evidence of export competitiveness being affected. The same can be said about sugarcane. In several commodities, the genuine comparative advantage that India holds will ensure export competitiveness, as in marine exports.
‘Legal MSP guarantee will only benefit Punjab and Haryana farmers’
There is an argument that small farmers do not have surplus produce to sell in the market and will not benefit from MSP and that it is the big farmers, especially those of Punjab and Haryana, who will benefit. It is also said that only 8-10 per cent farmers benefit from MSP. These are incorrect arguments.
First, the figures quoted are the claimed numbers of farmers who sell directly to government procurement agencies. Second, the argument is based on a flawed understanding that direct procurement by the government is the only way MSP works. The fact is most small farmers sell a substantial portion of their produce in the market and will benefit from higher market prices. It has been seen time and again in paddy procurement at MSP that even small farmers sell their produce at MSP to public procurement agencies, and then benefit again as consumers from the PDS system.
It is also proposed that in a Price Deficiency Payment (PDP) modality, to be adopted for perishable produce in particular, the individual farmer and her market transaction is not made as the basis for PDP payments into the farmer’s bank account. It is proposed that a geographical unit is used to cover all cultivators of a particular commodity in the PDP system, as compared to the modal prices of the designated mandis, and difference with MSP. In such a situation too, a small and marginal farmer will benefit.
‘It will lead to overproduction of a few crops and impact the ecology’
The current procurement regime has led to serious environmental degradation by promoting only 2-3 crops. The MSP regime demanded by the farmers is not the same as the current procurement regime and, in fact, seeks to address its serious deficiencies. With a legal framework for MSP, governments will be forced to promote low-cost ecological agriculture to reduce the cost of production of different crops. That will lead to environmental benefits. If the MSP regime covers all crops, farmers will be encouraged to diversify into other crops and crop varieties, rather than opt for paddy or sugarcane as is happening right now.
Kavitha Kuruganti is a farmers’ rights activist who was part of the historic Kisan Andolan of 2020-21 and a member of the Ramesh Chand Committee.
Kirankumar Vissa is co-founder of Rythu Swarajya Vedika, a farmers’ rights organisation in Telangana and Andhra Pradesh, and part of the Samyukta Kisan Morcha.
Yogendra Yadav, the national convenor of Bharat Jodo Abhiyan, is the founder of Jai Kisan Andolan, a constituent of the SKM, and an academic at CSDS.
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