CROP DIVERSIFICATION

In a bid to encourage crop diversification, the Central Government has hiked the Minimum Support Price (MSP) for Paddy, Pulses and Oilseeds (for all mandated Kharif Crops).

Important point:

  • The MSP is the rate at which the government purchases crops from farmers, and is based on a calculation of at least one-and-a-half times the cost of production incurred by the farmers.
  • MSP is a “minimum price” for any crop that the government considers as remunerative for farmers and hence deserving of “support”.
  • The Commission for Agricultural Costs & Prices (CACP) recommends MSPs for 22 mandated crops and fair and remunerative price (FRP) for sugarcane.
  • CACP is an attached office of the Ministry of Agriculture and Farmers Welfare.
  • The mandated crops include 14 crops of the kharif season, 6 rabi crops and 2 other commercial crops.
  • In addition, the MSPs of toria and de-husked coconut are fixed on the basis of the MSPs of rapeseed/mustard and copra, respectively.
  • The CACP considers various factors while recommending the MSP for a commodity, including cost of cultivation.
  • It takes into account the supply and demand situation for the commodity, market price trends (domestic and global) and parity vis-à-vis other crops, and implications for consumers (inflation), environment (soil and water use) and terms of trade between agriculture and non-agriculture sectors.

Issues with Hike:

  • This increase seems modest keeping in mind the cultivation costs – particularly on account of diesel used for powering tractors, irrigation pumps and harvester combines – have gone up.
  • Some increases, especially for maize, did not even keep pace with inflation.
  • Further, absence of assured procurement means farmers have no incentive to cultivate them.
  • The announcement comes at a time when farm unions have been demanding legislation to guarantee MSP for all farmers for all crops, and a repeal of three contentious farm reform laws

Issues:

  • The major problem with the MSP is lack of government machinery for procurement for all crops except wheat and rice, which the Food Corporation of India actively procures under the PDS.
  • As state governments procure the last mile grain, the farmers of states where the grain is procured completely by the government benefit more while those in states that procure less are often affected.
  • The MSP-based procurement system is also dependent on middlemen, commission agents and APMC officials, which smaller farmers find difficult to get access to.
  • The CACP, in its price policy report for the 2018-19 kharif marketing season, had suggested enactment of a legislation conferring on farmers ‘The Right to Sell at MSP’. This, it felt, was necessary “to instil confidence among farmers for procurement of their produce”.
  • The government should be promoting crop and animal agriculture that also leads to consumption of foods rich in proteins, vitamins, minerals and dietary fibre — as opposed to just calories and sugar — by the people.
  • The right way to do it is by freezing the MSPs of paddy and wheat, besides capping their procurement at, say, 10-15 quintal per acre per farmer.

SOURCE: THE HINDU,THE ECONOMIC TIMES,MINT

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