Agriculture

Exclusive: Several States Rejected Centre's 'Historic' MSP Increase, Demanded Higher Prices

In September, amid protests against the controversial new agricultural laws, the Modi government announced the MSP for six rabi crops. Official documents show that several states, including BJP-ruled ones, said the increase was minor.

New Delhi: Shortly after passing three controversial farm Bills in September, the Narendra Modi government announced the Minimum Support Price (MSP) of six rabi crops.

The announcement was made even as farmers across different parts of the country protested against the newly formulated laws. But Prime Minister Modi hailed the hike in MSP as ‘historic’, claiming that it will benefit crores of farmers.

However, many states have not approved of the MSP of six rabi crops – wheat, barley, gram, lentil, mustard and safflower – fixed by the Centre for the season of 2020-21.

Among the states that registered their protest is the largest wheat-producing BJP-ruled state of Uttar Pradesh. The Yogi Adityanath government had demanded to determine the MSP according to the increased cost of production in the state.

Official correspondence accessed by The Wire reveals that states like Jharkhand, Uttar Pradesh, Bihar and Chhattisgarh had written to the Ministry of Agriculture and Farmers Welfare to protest against the existing MSP of rabi crops and demanded that in order to grant fair remuneration to farmers, the minimum support price should be announced after state-wise calculation of all the costs involved in cultivation.

The state governments have argued that the Centre’s decision to marginally increase the MSP would neither benefit the farmers nor rescue them from their plight. However, the Central government has rejected all the demands in this regard.

Jharkhand

In order to ensure financial assistance to farmers, the Jharkhand government had demanded an increase in the MSP citing adverse circumstances arising out of the coronavirus epidemic and the problem of a large number of returning migrants to the state.

In a letter to Union agriculture secretary Sanjay Agarwal dated August 18, 2020, state agriculture secretary Aboobacker Siddiqui P. had asked that the MSP be fixed at Rs 4,254 per quintal for wheat, Rs 6,118 per quintal for lentils and Rs 6,517 per quintal for mustard.

However, the Centre has fixed the MSP of wheat at Rs 1,975 per quintal, which is Rs 2,279 less than the amount proposed by the state government.

Similarly, the MSPs for lentil and mustard are less than the state-recommended prices by Rs 1,018 and Rs 1,867 per quintal respectively.

Jharkhand Rabi MSP Recommen… by The Wire

In the letter, Siddiqui wrote, “Agriculture is the backbone of economy of Jharkhand. Around 70% of the population depends on agriculture for employment. It may further be noted that in the context of COVID-19, many farmers have returned to the state and are looking for employment in the agricultural sector.”

“The state is also developing a roadmap for providing gainful opportunities including in the farm sector, and any reduction in MSP will further increase the stress on the farm sector,” the letter further added. “Many farmers in the state have availed crop loans but due to the unfavourable climatic conditions, they are under severe distress to repay the loans.”

However, the Centre did not accept the state’s proposal.

Also read: As Freeze on Train Movement Bleeds Punjab of Rs 21,000 Crore, Farmers Hold Centre Responsible

Uttar Pradesh

In Uttar Pradesh, which contributes the highest share to the country’s total wheat production, that is 31.5%, the state BJP government had also raised objections to the MSP announced by the Modi government and demanded a hike to help farmers out of the crisis.

According to a confidential letter written by state special secretary Vidya Shankar Singh to the secretary in the Ministry of Agriculture and Farmers Welfare dated August 18, 2020, the UP government had demanded that the MSP of wheat be fixed at Rs 2,710 per quintal, which is Rs 735 more than the MSP announced by the Centre.

Similarly, the state government had asked to fix the MSP at Rs 2,380 per quintal for barley, Rs 5,500 for gram, Rs 4,365 for peas, Rs 5,150 for lentil and Rs 5,205 for mustard.

The MSP proposed by the UP government is much higher for all crops except lentils.

UP Rabi MSP Recommendation by The Wire

Singh wrote in the letter, “The main criteria for determining the minimum support prices of crops is their production cost. The cost of crops depends on the expenditure incurred in their production on human labour, animal labour, machine labour, land rent and agricultural investment, etc. The cost of agricultural investments has increased in general.”

To assess the cost of production, the Uttar Pradesh Agriculture Department had conducted a survey which showed that the cost of production estimated by the state is much higher than that assessed by the Centre’s Commission for Agricultural Costs and Prices (CACP).

The state government said, “Keeping in mind that the majority of the population in the state is dependent on agriculture and agriculture-based occupations, the minimum support prices of crops should be declared as per the prices recommended by the state government, so that farmers in the state are able to get remunerative prices.”

The letter further stated, “If the MSP is fixed according to the recommendation of the state government, the farmers would be prevented from migrating from the agricultural sector. In addition, by increasing the production of crops, the income of farmers can also be increased.”

While requesting to implement its recommendation, the UP government also cited said that about 92.8% of total farmers of the state are small and marginal, possessing about 65.8% of the total agricultural area available.

Also read: It’s Time for a 10-Year-Plan that Says How Much Rice and Wheat Will Be Procured From Each State

The state also claimed that the average size of land holdings in the state is only 0.73 hectare, of which the average agricultural land with marginal farmers is just 0.38 hectare. The food storage capacity is also very small.

“Due to the small size of the holdings, their resources and ability to use agricultural inputs are also low,” claimed the Adityanath government. “Therefore, it is in the best interest of farmers that they receive a fair price for their produce.”

The Modi government, however, turned down the proposal of Uttar Pradesh government as well. 

Bihar

The BJP-led Bihar government had also protested against the MSP of rabi crops announced by the Centre and demanded that the price be determined on the basis of increased production cost.

According to a letter written by state agriculture secretary N. Saravana Kumar to the agriculture secretary of the Government of India Sanjay Agarwal on August 21, 2020, the Bihar government had demanded that the MSP be set at Rs 2,583 per quintal for wheat, Rs 5,538 for gram, Rs 5,541 for lentil and Rs 5,919 for mustard.

The MSP proposed by the state is much higher than the prices announced by the Centre, that is Rs 1,975 per quintal for wheat, Rs 5,100 for gram, Rs 5,100 for lentils and Rs 4,650 for mustard.

Recommendations sent by the Bihar government.

Arguing in favour of increasing the MSP, Kumar wrote, “There are several factors which have led to an increase in the cost of production. These factors include excessive dependence on human labour, large number of small and marginal farmers, slow pace in adoption of new technology, poor socio-economic status of farmers, excessive dependence on diesel pump-sets for irrigation and increase in prices of seeds as well as phosphatic and potash fertilisers.”

“The Central government should fix the minimum support price keeping in mind the circumstances of the state,” stated the letter.

But the Centre ignored these demands.

Chhattisgarh

Similarly, the Chhattisgarh government also sent a proposal to the Centre on September 5, 2020, demanding an increase in the support prices. The state agriculture department had sought the hike in MSP after calculating the cost of rabi crops in detail.

In calculating the cost of production, the state government has considered several points such as the cost of labour, interest on loans, rent of land, expenditure on security and transport, and recommended that the MSP of wheat be fixed at Rs 2,100 per quintal, barley at Rs 1,650, gram at Rs 5,000, lentil at Rs 5,000, mustard at Rs 4,600 and safflower at Rs 5,400.

Also read: Rajasthan: After a Prolonged Battle, Farmers Get Crop Insurance Claims

However, the MSP announced by the Centre for wheat, barley and safflower is lower than the proposed MSP. The state government has claimed that the support prices are not in accordance with the expenditure incurred by farmers on various items as well as agricultural costs.

Note that the Union Ministry of Agriculture’s CACP recommends minimum support prices on the basis of estimated cost of production.

The CACP calculates the average cost of production in all states and determines the MSP based on it. As a result, farmers in some states get a fair price, while in several other states the MSP granted to farmers is not even equal to the production cost.

Expressing serious concern over this, various states including several BJP-ruled states are issuing recommendations to the Centre to determine the MSP of seasonal crops according to the state-wise cost.

A study of various CACP reports also shows that the MSP fixed for crops is less than the production cost in many states or has been increased only slightly.

The Wire had recently reported how there is a huge difference between the MSP announced by the Centre for kharif crops and the prices proposed by several state governments.

Official documents reveal that various state governments, including BJP-ruled states, had demanded that the Centre determine the MSP keeping in mind the increased cost of production. But the demands were not met.

In addition, The Wire had earlier reported how a single MSP for crops across the country is disadvantageous for farmers and how several state governments, including BJP-ruled states, have demanded a state-based MSP calculation.

Translated from Hindi by Naushin Rehman. Read the Hindi original here.