MSP : Minimum Support Price - Farm produces
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The three farm ordinances introduced by the Modi government aimed to ease restrictions for farmers and help them access markets, assure returns, and exempt more farm goods. However, some argue higher MSP alone will not solve agrarian distress and revival requires freeing agriculture from restrictions, new technologies, and state reforms. While intended to boost investment, yields, and incomes, ideas remain stalled between intent and execution. The estimated higher costs of $3.5 billion also risk higher borrowing, debt, and interest rates. Recent reforms upset commission agents who benefit from APMCs, but most farmers see no downside. The roles of arhtiyas are debated as some allege exploitation while others argue they provide key services. Large food stockp
MSP : Minimum Support Price - Farm produces
- 1. MSP Presentation by Primary Information Services www.primaryinfo.com mailto:primaryinfo@gmail.com
- 2. Farm Bills • The three ordinances were — The Farmers’ Produce Trade and Commerce (Promotion and Facilitation) Ordinance, 2020, The Farmers (Empowerment and Protection) Agreement on Price Assurance and Farm Services Ordinance, 2020 and The Essential Commodities (Amendment) Ordinance, 2020. • The Union Cabinet announced that the ordinances were promulgated to ease farmers’ access to markets across the country, help them enter contracts for assured returns and exempt more farm products from the Essential Commodities Act (EC) respectively. These ordinances were introduced by the Modi government to ease the impact of Covid-19 on farmers in India.
- 5. British contribution ! India Followed !!
- 7. Indian economist Dr. Arvind Virmani
- 11. There is no disputing agrarian distress. Equally, higher MSP alone will not redress the stress (Why agriculture cannot wait). Revival of agriculture demands its liberation, induction of technology, and reforms by the states to create an enabling ecosystem. It is not enough to generate ideas. The ideas of a national market for agriculture and the draft legal template for group/collective/contract farming can boost investments, per acre yield and farmer incomes but are stranded between intent and execution.
- 12. There is no escaping the estimated cost of Rs 35,000 crore this imposes on the national exchequer. The price of higher borrowing and larger debt will visit interest rates and currency value.
- 13. The APMC Conundrum Recent reform of agricultural marketing would upset those who have guaranteed income from Agriculture Produce Marketing Committee (APMC), but for the majority of the farmers, there is no downside.
- 14. WHO ARE ARHTIYAS IN GRAIN-BOWL STATES? • The arhtiyas -- the main legitimate link between farmers on the one side and procurement agencies/buyers on the other -- in the two grain-bowl statesPunjab and Haryana • In this existing system, the arhtiya intermediaries receive a commission of 2.5 per cent, which levy on the FCI and other buyers as part of state taxes on procurement. • The commission agent exploits the farmer on the one side & beats the very concept of MSP by Government Support on the other side • The Arhtiyas pay the entire payment in cash, without any paperwork. • The commission agent, however, foresaw no threat to his business from the new laws, saying farmers remain heavily dependent on the arhtiyas. • Similar Commission agents exist all over the country acting as “go between” among Farmers, Government officials, private Traders ; the business of commission agents will continue as usual.
- 15. Middlemen or Service Providers: What Role Do Arhtiyas Play in Market Yards? • Thee Centre has said that the farm Bills will relieve cultivators from the 'clutches' of the commission agents • Arhtiyas, who have operations in Punjab and Haryana mainly, provide services to the farmers after they bring their produce to the APMC market yard. They fear that with the implementation of the laws and the setting up of parallel private market yards, the APMC market will lose relevance and their mandi labour, over 3 lakh of them, and arhtiyas will eventually lose all work. • Arhtiyas are not middlemen. They take a commission (2.5%) for the work they do and the services they provide to the farmer. There’s hatred towards arhtiyas because they are money lenders also • In the absence of institutional credit for many farmers, they depend on arhtiyas for money. • Once farmers get caught in the cycle, it is difficult for them to come out of it. That’s why historically and culturally, arhtiyas have had a bad reputation
- 16. Explained: Why are Punjab arhtiyas under the I-T dept scanner? • The Arhtiyas pay & Receive the entire payment in cash, without any paperwork • Reportedly, non-institutional sources like arhtiyas finance almost 66.74% of loans in unbanked villages and 54.45% of loans in areas that have a bank in Punjab. • There is need to make the arhtiyas’ lending process transparent because the clutches of non-institutional loan are also one of the main factors behind farmer suicides in Punjab.
- 17. Food Corporation of India • The procurement programme of the FCI is an open- ended one, which accepts fair quality offered and does not halt purchases at any time. Therefore, there are excess stocks with the government, creating another set of problems: locking up of capital, exposing the foodgrains to the threat of rot, etc. As of September 1, stocks of rice and wheat stood at 70 million tonnes against a buffer stock norm of around 41 million tonnes. On June 1, stocks were 83 million tonnes against a norm of 21 million tonnes. • MSP is a misnomer because the government steps in to purchase rice and wheat regularly as part of the Public Distribution System. The PDS has been sidestepped partly under the DBT, which suggests that the ration shop may not be required in the long run. In that case, what happens to the foodgrains that are procured?
- 18. • There is politics involved as successive governments work to placate farmer groups. Due to the existence of such pressure groups, the MSP programme has become a shibboleth that cannot be touched. • On the other side, as households have no lobby groups, there is no representation at the policy level. When fuel subsidy was removed, and the middle class paid more for its LPG and kerosene, there was no objection. • When the fixed income earners see their incomes being denuded by a continuous lowering of interest rates, there is no lobbying for their interests. • In such a case are we making too much noise on this issue due to the political undertones?
- 19. Who will the Farm Bill benefit?
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