You ever have heard the term MSP OR Minimum Support Price in the news, it became a trending topic after reforming the new Farm Bill in India. Let's understand it.
What is MSP?
MSP stands for the Minimum Support Price, that offered by the Government of India to the farmers for their production. Government announces the set of prices for more than 20 commodities under the guideline of CACP to secure the earnings of producers. Government releases these prices before sowing, which encourages the producer to raise their production.
Who determines MSP?
CACP (Commission for Agricultural Costs and Prices) determines the MSP since 2009, taking some Terms of Reference (ToR) factors keeps in mind.
How Calculating MSP
In calculating MSP CACP takes into account the 'A2 + FL' formula with including 'C2'. Which based on estimating a different kind of investments of farmers on their production.
A2: Input cost paid by the farmer on their production for differents items like seeds, fertilizers, pesticides, hired labor, or machinery charge.
A2 + FL: The assessment of the family labor also takes into the record with input cost over the production.
C2: (Comprehensive Cost) including the rent or lease on the land and the interest on the loans of farmers with A2+FL cost.
MSP Data
Minimum Support Price (MSP) from the last decade of some products like Wheat, Paddy, and Coarsegrain are given as:
Historical framework of MSP
MSP system was introduced in mid of 1960 amid the food crises in India, to encourage the farmer to raise their yield. It is the time for the Green Revolution in India which influence Indian farmers to use a high yield variety of seeds and the technology in agricultural farming for cereals like wheat and paddy.
MSP policy was mainly focused on food security and regulate price inconstancies made by dryness, floods, and global prices for exports and imports. The policy was aimed to ensure profit to farmers on their production and providing food grain to the consumers via the Public Distribution System (PDS) at reasonable prices. Price assurance to the farmers for their production encourages them to adopts advanced technology in farming to boost their production.
In 1965 the Agricultural Price Commission was set up on the recommendation of L.K. Jha committee. Which further in 1985 renamed as Commission for Agriculture Cost and Price (CACP) to advise the government on agricultural price policies.
In 2004 government set up the National Commission on Farmers (NCF) under the chairmanship of Professor M. Swaminathan to address the agricultural dilemma of farmers. NCF submitted their report on 2005-2006 and strongly recommends the increase MSP by 50% of final C2 (Comprehensive Price). But unfortunately not no ruling government implement this till now.
Current Status of MSP
The government of India India recently passed the Indian farm reform 2020 bills in parliament on 27 September 2020. New reforms suggest revoking the MSP scheme and providing multiple marketing channels, and establish the framework of pre-agreement based farming.
Wheat and Paddy farmers who were beneficiaries of MSP are against the new reforms that revoking the MSP scheme. Also, small farmers are opposing the bills because they are not able to take benefits from multiple marketing channels.
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