Context:- The Central government has hiked the minimum support price (MSP) for common paddy from last year’s price of ₹1,868 to ₹1,940 a quintal for the coming kharif season.
What is MSP:-
- The concept of MSP was first mooted in 1966-67 mainly to incentivise the farmers to use the dwarf ‘miracle’ wheat varieties during the green revolution.
- The Minimum Support Price or the MSP is commonly known as the way of protecting the farmers in India from the uncertainties of the markets as well as those of the natural things such as hailstorms, draught etc.
- A ‘safety net’ for the farmers, the MSP is the core of the agricultural revolution which made india a food surplus country.
- MSP is set by the cabinet committee of economic affairs.
- the cabinet committee of economic affairs is chaired by P.M.
- On the recommendation of The Commission for Agricultural Costs & Prices (CACP), CCEA announces the MSP.
- CACP is an attached office of the Ministry of Agriculture and Farmers Welfare
- Came in existence in January 1965.
- Crops include 14 crops of the kharif season, 6 rabi crops and 2 other commercial crops.
- There are 24 crops for which MSP is announced by the CCEA.
A difference between procurement price and MSP:-
- It is the worth at which the govt. purchases the crop after harvesting is understood as procurement price.
- The main difference between the Procurement Price and MSP
- MSP is said before sowing while PP is said after harvesting.
- Since 1968-69, there’s no practice of declaring separate Procurement Price and MSP. so now MSP is procurement price.
What is the problems within the MSP:-
- lack of state machinery for procurement for all crops except wheat and rice.
- Crop production:
- The crop production remains unviable.
- The support prices that are being provided don’t increase at par with increase in cost of production.
- MSPs have unequal access:
- The benefits don’t reach all farmers and for all crops.
- The implementation is just too weak.
- Procurement related problems
- leaving only 1/3rd of cereals are for the open market.
- It prevents earning of profit by producers.
- This has created shortage of crops within the open market
- It has shifted consumption towards non-cereal foods
- lack of awareness about MSP
- Excess storage:
- Insufficient storage has resulted in huge piling of stocks
- Issues in WTO:
- India’s MSP scheme for several crops has been challenged by many countries within the WTO. for instance , Australia has complained of the MSP on wheat
- Ecological problem
Various committees on MSP:
- National Commission on Farmers: In 2004 under the chairmanship of Professor M.S. Swaminathan. suggestions to realize the goal of “faster and more inclusive growth”. Recommended to repair minimum support prices(MSP) for crops at levels” atleast 50 per cent quite the weigted monetary value of production.
Ramesh Chandra Committee:
examine the methodological issues in fixing MSP. The Commission suggested For calculation of cost family labour head should be considered as trained worker . The interest on capital should tend for the entire season. Post harvest costs, including cleaning, grading, drying , marketing and transportation should be included The committee recommended that the value 2 should be raised to 10% account for risk premium and managerial charges.
- the government must explore alternate models to spice up farmer’s income.
- A counterpart of the MSP is that the Market Intervention Scheme (MIS), under which the government procures perishable commodities like vegetable items.
- Procurement system of the govt must be streamlined.
- To solve the matter of MSP, Both NITI and Economic Survey recommend Price Deficiency Payment (PDP).