Farmers’ Protest and Minimum Support Price (MSP): A Comprehensive Overview

Ayushi Rajput February 27 2024 5:57 PM

The ongoing “Delhi Chalo” protest, which began on February 13, has witnessed farmers from Punjab, Haryana, and western Uttar Pradesh marching towards Delhi with unwavering determination. At the heart of their agitation lies a crucial demand: Minimum Support Price (MSP). Let’s delve into the details of what MSP entails and why it has become a focal point of contention.

Historical Context
  1. Green Revolution: The 1960s witnessed the Green Revolution, which aimed to enhance agricultural productivity through high-yielding crop varieties, modern techniques, and increased use of fertilizers. However, it also led to indebtedness among farmers due to rising input costs.

  2. MSP Emerges: To address this, the Indian government introduced MSP in the 1960s. It aimed to provide a safety net for farmers by ensuring a minimum price for their produce.

What is Minimum Support Price (MSP)?

MSP serves as a safety net for farmers, ensuring them a minimum income for their crops. It protects against market fluctuations, providing stability and income security. Here are the key points about MSP:

  1. Government Procurement: MSP is the lowest rate at which government procurement agencies purchase crops directly from farmers.

  2. Determining Factors: The Commission for Agricultural Costs and Prices (CACP) calculates MSP, considering factors such as production costs, market trends, and demand-supply dynamics.

  3. Cabinet Decision: After the CACP submits its recommendations, the Cabinet Committee on Economic Affairs (CCEA), chaired by the Prime Minister of India, makes the final decision on MSP levels.

How is MSP Calculated?

The calculation of MSP involves both explicit and implicit costs incurred by farmers:

  1. Explicit Costs (A2): These cover expenses like chemicals, fertilizers, seeds, and hired labor for crop growth, production, and maintenance.

  2. Implicit Costs (A2 + FL): Implicit costs include factors such as family labor and rent. A2 + FL represents both actual and implicit costs.

  3. Total Costs (C2): C2 incorporates A2 + FL, fixed capital assets, and rent paid by farmers.

Additionally, the CACP considers various other factors:

  • Cost of Cultivation: Per hectare and regional differences.

  • Cost of Production: Per quintal and regional variations.

  • Market Prices: Fluctuations in relevant crop prices.

  • Other Production Costs: Associated changes, labor costs, and commodity prices.

  • Supply Information: Area, yield, production, imports, exports, and stocks.

Why Are Farmers Protesting?

The Indian farmers' protest began on the morning of February 13, 2024. Farmers across India are demanding several key reforms and guarantees from the government. The farmers’ demands extend beyond MSP:

  1. MSP Assurance: Minimum Support Price (MSP): Farmers are demanding a government guarantee on assured floor prices for their crop production. They want the MSP to be implemented effectively to protect their income.

  2. Fixed Daily Wages: The protesters seek fixed daily wages for farming under the MGNREGA scheme. They propose Rs 700 per day with 200 days of guaranteed employment each year.

  3. Profit Margin: Farmers want the government to ensure at least a 50% profit over their overall cost of production. This measure aims to make farming economically viable.

  4. Legal Guarantee for MSP: The protesters call for a legal guarantee of minimum support price (MSP) for all crops. This would provide stability and security to farmers.

  5. Swaminathan Committee Recommendations: The farmers demand the implementation of the recommendations made by the MS Swaminathan Committee on agriculture.

  6. Justice for Lakhimpur Kheri Violence: The protest also seeks justice for the violence that occurred in Lakhimpur Kheri during previous agitations.

  7. Withdrawal of Cases: Farmers want the withdrawal of cases registered against them during the last protest in 2020-21.

    The protests have led to demonstrations, sit-ins, and tractor marches in parts of Punjab, Haryana, and some areas of Uttar Pradesh.

Government's Response

After repealing the three contentious farm laws in 2021, the Indian government announced the formation of a committee to discuss MSP and related issues. However, concrete progress on this front remains elusive, with discussions ongoing between government officials and farmer union leaders.

Challenges with Legalising MSP:

While ensuring MSP sounds beneficial in theory, its implementation poses several challenges. These include forced procurement leading to overproduction, discrimination among farmers, resistance from private traders, and financial strain on the government.

Alternative Initiatives to Protect Farmers' Income:

Experts suggest exploring alternatives such as direct income support, insurance schemes, price-difference payment options, and expanding existing schemes like PM KISAN to provide stable income to farmers.

Concerns Related to WTO and FTAs:

Farmers are wary of international trade agreements that could flood the domestic market with cheaper imports, adversely impacting local producers. They perceive such agreements as favoring multinational corporations and compromising their autonomy.

Current State of MSP and Farmer Demands:

Despite the government's announcement of MSP for certain crops, discrepancies exist between the MSP calculation and farmers' demands based on the C2+ 50% formula advocated by the Swaminathan Commission.

Global Perspective on Farmers' Protests:

Farmers across the globe face similar challenges, ranging from low crop prices to unfavorable policies and environmental issues. Protests have been witnessed in regions like South America, Europe, North and Central America, Asia, and Oceania.

Recent Update

As of February 19, 2024, farmer leaders participating in the ‘Delhi Chalo’ protest have rejected the government’s proposal regarding buying pulses, maize, and cotton at MSP.

In conclusion, the farmers' protest emphasizes the need for a comprehensive approach, balancing the concerns of farmers and the challenges faced by the government. A collaborative dialogue considering both sides' perspectives is crucial for a sustainable resolution. The nation watches, hopeful for a solution that respects the hard work and sacrifices of our farmers.

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