• UGI USER
  • Feb 20, 2024
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INCOME, NOT MSP FARMERS’ PROTESTS HIGHLIGHT FUNDAMENTAL PROBLEM

Syllabus:

GS 2:

  • Government policies and interventions for development in various sectors and issues arising out of their design and implementation.

Focus:

  • Farmers are demanding attention to their grievances on Delhi’s borders.
Source:- Hindustan Times

Key Issues Highlighted

  • Farmers’ Protests: Predominantly from Punjab, farmers are demanding attention to their grievances on Delhi’s borders, pressing for rational government engagement to address their concerns.
  • Core Demand: Legal binding of Minimum Support Prices (MSPs) based on the Swaminathan formula, advocating for a 50% profit over the comprehensive cost (Cost C2), including all paid-out costs plus imputed values of family labor, land, and capital.
  • Economic Implications: Demands also encompass loan waivers, pensions, minimum wage adjustments, and employment in agriculture through MGNREGA, potentially straining the fiscal budget and triggering food inflation.
Key Demands of Farmers

MSP Guarantee and Pricing

·   Enact a law to ensure a guaranteed Minimum Support Price (MSP) for all crops.

·   Align crop prices with the recommendations from the Dr. M.S. Swaminathan Commission, adopting the C2 + 50% formula. This formula demands MSP to be at least 50% more than the weighted average cost of production, incorporating the imputed costs of capital and land rent.

Debt Waiver and Land Acquisition

·   Complete debt waiver for both farmers and laborers.

·   Implement the Land Acquisition Act of 2013, ensuring farmers’ written consent before land acquisition and compensation at four times the collector rate.

Legal and Trade Demands

·   Seek justice for the Lakhimpur Kheri incident in October 2021.

·   Withdraw India from the World Trade Organization (WTO) and halt all free trade agreements (FTAs).

Welfare and Compensation

·   Introduce pensions for farmers and farm laborers.

·   Compensate families of farmers who passed away during the 2020 Delhi protests, including job provision for one family member.

Legislation and Employment

·   Reject the Electricity Amendment Bill 2020.

·   Extend MGNREGA employment to 200 days per year with a daily wage of Rs 700, linking the scheme to farming activities.

Quality Control and Indigenous Rights

·   Implement strict penalties for companies producing counterfeit seeds, pesticides, and fertilizers; demand improvements in seed quality.

·   Establish a national commission for spices like chilli and turmeric.

·   Guarantee the rights of indigenous peoples over water, forests, and land.

Policy Dilemma

  • Income versus MSP: The essence of the protest is the quest for higher income for farmers, diverging from the focus on MSP alone.
  • Export Bans and Market Restrictions: Current policies that limit agri-exports, impose stocking limits, and mandate below-cost market interventions are identified as anti-farmer, benefiting consumers at the expense of producers.
  • Fiscal Challenges: Fulfilling farmers’ demands poses significant fiscal challenges, with substantial budget implications depending on the extent of government procurement and market price levels.

 Strategic Insights for Augmenting Farmers’ Income

  • Broadening the MSP Regime: The debate extends to why only 23 crops under MSP should benefit, ignoring major agricultural outputs like milk, which surpasses the combined value of paddy, wheat, pulses, and sugarcane.
  • Growth Areas in Agriculture: Livestock, fisheries, and horticulture emerge as sectors with higher growth potential, advocating for a value chain approach to enhance farmers’ incomes.
  • Productivity and Market Access: The key to higher income lies in boosting productivity sustainably and facilitating access to domestic and international markets.
  • Lifting Restrictions: Advocacy for removing export bans, stocking limits, and halting below-cost releases by the Food Corporation of India (FCI) to shift favor from consumers to farmers.
  • Reorientation of Subsidies: Suggests a shift in subsidy distribution, proposing 75% support towards producers for price stabilization and 25% for targeted consumer aid.
  • Rational Policy Making: Calls for a balanced policy framework that adequately addresses the interests of both producers and consumers, underlining the need for a strategic overhaul in agri-food policy orientation.
Minimum Support Price (MSP) Regime in India: An Overview

Source:- IE

Background

·    Initiated by the Food-Grain Enquiry Committee under the Nehru administration in 1957; found to be ineffective.

·    The Food Grain Price Committee, led by LK Jha, was established by Lal Bahadur Shastri in 1964 to advocate for an MSP regime.

·    The Shastri government swiftly accepted the committee’s report, leading to the first MSP announcement in 1967.

·    The Agricultural Prices Commission was established to determine MSPs for crops, later renamed the Commission for Agricultural Costs and Prices (CACP) in 1985.

About MSP

·    MSP acts as a market intervention by the government to protect agricultural producers from sudden drops in farm prices, especially during years of bumper production.

·    Announcements made by the Cabinet Committee on Economic Affairs, chaired by the Prime Minister.

·    Based on the recommendations of the CACP at the start of the sowing season for specific crops.

·    CACP considers demand and supply, cost of production, market price trends, inter-crop price parity, trade terms between agriculture and non-agriculture, a minimum 50% margin over cost, and MSP’s impact on consumers.

Objectives

·    Guarantees a minimum price for farmers’ produce to prevent distress sales and ensures procurement for public distribution.

·    Activated when market prices fall below the MSP due to surplus production.

Crops Covered

·    MSPs are announced for 22 mandated crops plus a fair and remunerative price (FRP) for sugarcane, making it a total of 23 crops.

·       Includes 7 cereals (paddy, wheat, maize, bajra, jowar, ragi, barley), 5 pulses (chana, arhar/tur, urad, moong, masur), 7 oilseeds (rapeseed-mustard, groundnut, soyabean, sunflower, sesamum, safflower, nigerseed), and 4 commercial crops (cotton, sugarcane, copra, raw jute).

 

Source:

https://epaper.thehindu.com/reader

Mains Practice Question:

Discuss the impact of current agri-food policies on farmers’ income in India, highlighting the fundamental issue of favoring consumers at the cost of producers as observed in recent farmers’ protests.