Maharashtra mulls separate MSP for crops to address agrarian crisis

By Hindustan Times on 24 Jan 2018 | read

In a bind over agrarian protests, the state is mulling adopting its own minimum support price (MSP). This will give farmers an assured price for certain crops, over and above the MSP declared by the Centre.

MSP refers to a minimum price promised to the farmer by the Government of India to insure him against a drop in market prices. The state government hopes this can be implemented under the Centre’s proposed market assurance scheme (MAS), which plans to decentralise powers of procurement of foodgrains to the states when market prices drop to ensure maximum farmers get the MSP.

“In our initial discussion over this scheme, the Centre conveyed it is willing to give states the freedom to decide the MSP for crops as long as it is not below the price decided by them. This can give relief to farmers when market prices drop because the complaints so far have been that the Centre’s MSP does not reflect regional realities and cost of cultivation. “If we procure these crops through our mechanism the Centre has also promised to pay up to 40% of our losses,’’ said Bijay Kumar, principal secretary of agriculture department, who held an initial round of consultation with the Centre on the scheme.

He, however, said for this scheme to be successful, there has to be a consensus between different states producing the same crops. The state government has also sought for a promise of working capital from the Centre to roll out this scheme and a say in deciding import duties for crops.

The state agriculture department officials said the government can roll out its reforms only after the central cabinet approves and adopts MAS formally. However, it will be a challenge to adopt this scheme even after the Centre approves it. For starters, the state will have to enlarge the scope of the Cotton Federation of Maharashtra to also procure foodgrains and pulses, said a senior agriculture officer, who did not want to be named. Currently, the federation only procures cotton. It will also have to change the role of a public sector undertaking like the Maharashtra Agro Industries Development Corporation to sell the foodgrains procured, he said.

Despite the long road ahead, the BJP government is keen on adopting this scheme. The reason is that the ruling government has been battling farm crisis since it took over in 2014. The farm crisis continues to be its weakest point, despite the promised loan waiver as it heads for an election year in 2019.

“I think we should look at paying the deficit between the Centre-announced MSP and the cost of cultivation in the state instead of getting entangled in procurement — along the lines of Madhya Pradesh’s Bhawantar Bhugatan Yojana, but the system of paying this deficit needs to be worked out differently to avoid collusion by traders. We are still discussing how best to roll this out, but on the whole the state government is positive about this scheme,’’ said Pasha Patel, chairman of the State Commission for Agriculture and Prices and a BJP legislator.

The state commission was set up last year following the farmers strike.

The state commission for agriculture and prices will rely on 279-odd data centres and four agriculture universities to work out the MSP for a basket of crops.

“The Karnataka government is already offering a bonus over and above the MSP promised by the Centre. It will help the farmers if the state government can pay the deficit between the MSP and the cost of cultivation, but a different system needs to be evolved for that to avoid the mismanagement as seen in Madhya Pradesh. I also do not think states have financial resources of infrastructure facilities to undertake procurement of multiple crops,’’ said Kavita Kuruganti, national co-convenor of Alliance for Sustainable and Holistic Agriculture.

She said there also needs to be a mechanism to ensure states do not sell off the procured grains at the time of the new harvest.