If there is an MRP applicable for the agri based processed food/utilities, why not there be an MSP for primary agri produce? Indian farmers are getting only about one third of the final selling price of fruits and vegetables, while a majority share is skimmed away by wholesalers and retailers, a series of research papers published by RBI on food inflation has shown.
This is in contrast to other sectors, such as dairy, where farmers receive around 70% of the final price. Egg producers seem to be best placed, getting 75% of the final price, while for poultry meat, farmers and aggregators together account for 56% of the price.
While consumers fret about tomato, onion and potato (TOP) prices at least twice a year as prices soar on seasonal factors such as excess or deficient rains or high or low temperatures, it is not as farmers benefiting. The papers estimated that farmers receive approximately 33% of consumer price for tomatoes, 36% for onions and 37% for potatoes. The report also provides figures for fruits, estimating that farmers receive 31% of final price for bananas, 35% for grapes, and 43% for mangoes in the domestic market.
The study, co-authored by agriculture economist Mr. Ashok Gulati, also concludes that forecasting price spikes is possible through a “balance sheet approach”. The papers also suggest various means in which the policy makers can eradicate these price spikes. To prevent price spikes in TOP, the study recommended leveraging e-NAM, promoting farmer collectives and relaunching futures trading, building more cold storage facilities and increasing processing facilities etc.
Any thoughts on why the Insolvency & Bankruptcy Code, which is applicable to Industrialists and Corporates to legitimately cleanse their NPAs & Debts from their Creditors / Bankers, be similarly not applied to Farmers & their Loans in India! - Just because it is an unorganised sector or it does not have any guaranteed returns like any other industry?
Hence, there is an urgent requirement for providing MSP to farmers as there is an MRP pricing for all secondary products; through which, the price spikes can be controlled through implementation of proper check mechanisms which shall be beneficial to end consumer and the ultimate beneficiary shall be none other than the producer i.e., farmer.
It has always been a myth that MSP shall mandatorily be provided by governments, where in the governments procure the farm products at MSP. This results in huge burden of exchequer due to poor logistics, supply chain management capabilities of government / its departments resulting in more than 40% wastage of such procured products due to shorter shelf-life issues.
MSP to farmers
Agriculture, like any other enterprise, can sustain only when it can generate net positive returns to the farmer-producer. A market is a place, where a produce is transacted and price per unit is determined, resulting in the total value that a farmer-producer fetches. Since value returns impinge upon a farmer’s income, agricultural markets and marketing efficiency become critical. In order to protect the interest of the farmer community and to enhance farmers’ income, it entails an urgent need to revisit the existing market structure and bring in a more competitive marketing environment. This combined with improved levels of productivity and reduced cost of cultivation/production can drive agricultural growth, farmers’ welfare, productive employment and economic prosperity in rural areas of the State.
Organised wholesale marketing in the State is promoted through a network of regulated markets set up under the provisions of States’ Agricultural Produce Marketing (Regulation) Acts. These market structures are aimed at regulation and attainment of transparency in transactions, with a view to transferring remunerative prices to the farmer producer. Over time, however, these markets have been found inadequate due to the ever-changing profile of India’s farm produce. The recent developments show higher levels of outputs in the domain of agriculture, horticulture, dairying, poultry and fisheries, besides of course increasing quantum of cereals, pulses and oilseeds.
With increasing purchasing power, mobility and changes in tastes and preferences, the consumers possessed by greater information and awareness are beginning to demand quality and differentiated products at rational price. The restrictive market structures as exists in the State today are not adequately enabling the producers to harvest the economic advantages of place, time and form value of their agricultural commodity.
What is needed is a barrier-free unified agricultural market in the State. The structure of State agriculture is changing, and the sector is diversifying around cereals, pulses, oilseeds, commercial crops like cotton, horticultural crops, livestock, fisheries, poultry etc. This needs appropriate legislation to enforce minimum support prices as is declared by Central/State Government for Farm produce with following necessary legislative interventions:
i) Creation of a conducive environment for setting up and operating private wholesale market yards and strengthening Rythu Bharosa Kendrams (RBKs) so as to enhance competition among different markets and market players for the farmer’s produce, to the advantage of the latter.
(ii) Promotion of direct interface between farmers and processors/ exporters/ bulk buyers/ end users through RBKs so as to reduce the price spread bringing advantage to both the producers & the consumers.
(iii) Enabling declaration of warehouses/ silos/ cold storages and other structures/ space as market sub –yard to provide better market access/ linkages to the farmers.
(iv) Giving freedom to the agriculturalists to sell their produce to the buyers and at the place & time of their choice, to whomsoever and wherever they get better prices.
Therefore, an Act to safeguard the interests of the farmers by ensuring them the MSP should be brought in. The MSP should be subject to periodic revision. Any transaction in violation of the minimum support price notified under the Act in regard to the farmer’s produce should be an offence as prescribed under this Act. Such produce purchased not only by the government agencies, even the procurement by private entities, MNCs, suppliers, mediators (middlemen), common people etc., should be done at MSP only i.e., People Public Private Partnership (PPPP).
All the Rules and Regulations regarding Farmer’s Produce Support Price Fixation and enforcement should be laid down pursuant to this Act so as to implement the Minimum Support Price and delegate the powers to such officers as authorised by the Government so as to penalise and seize equipment/ vehicles in case of violations under provisions of this Act. The Government should appoint the Controlling Authorities under the provisions of this Act. The Controlling Authority should take all the steps for the enforcement of the provisions of the Act which includes creation of online platforms / website/ mobile app etc.
(Writer is Manager, Capital Projects & Infrastructure at Capital Fortunes Pvt. Ltd. Previously he was Head of Legal & Liaisoning at Andhra Pradesh Urban Infrastructure Asset management Limited. The content in this article is the opinion of the writer)