Discord over MSP

The fact that MSP (minimum support price) doesn’t even find a mention in the laws enacted recently by the Centre has fuelled mistrust among farmers, who fear that the time-tested regime is on its way out. Though the Union government has been insisting that this system would continue, the farming community in Punjab and other states remains unconvinced. The Bills passed by the Punjab Assembly on Tuesday seek to amend the Central legislation to ensure that wheat and paddy — the staple crops grown in the grain-surplus state — are not bought for less than the respective MSP; there is also a provision for punishment for sale or purchase below this price.

‘Guaranteed’ MSP is certainly music to the toiling farmers’ ears, but it’s far easier said than done. It’s the Centre that fixes the support price of various crops, as per the recommendations of the Commission for Agricultural Costs and Prices (CACP). The Commission takes into account several factors: the cost of production, demand and supply, price trends in the domestic and international market, and inter-crop price parity. It’s a one-size-fits-all policy applicable across the country. The Punjab Bills, aimed at addressing the fears of the farming community over the possible dismantling of the MSP regime, don’t seem to have created an alternative architecture to ensure governmental purchase at an assured price.

With Central agencies procuring crops at best at the fixed MSP, some states have been offering a bonus — over and above the support price — to compensate farmers. The CACP has cautioned that such moves create distortions in the market and affect the ‘balance of crops’. Moreover, considering issues such as overproduction and inadequate storage, states can’t do much on their own to ensure a good bargain for the majority of the growers. A legally enforceable MSP won’t preclude distress sale unless the Centre and the states work in tandem for the sake of those who make the granaries overflow — even during a pandemic.