MSP of Rabi Crops 2015-16

To The Chairperson, Commission For Agricultural Costs and Prices Government of India, Krishi Bhavan New Delhi-110001

Sir,

The Commission For Agricultural Crops and Prices is meeting at a very crucial juncture to formulate the price policy for Rabi crops of 2014-15 to be marketed during 2015-16 season. The prices formulated by the CACP on the basis of meetings with representatives of agricultural universities, State Agriculture Departments and Farmers’ representatives could act as a significant incentive for the Farmers of our country who are facing an acute agrarian crisis and finding agriculture increasingly unviable.

The All India Kisan Sabha wishes to place before you some of our serious concerns regarding Agricultural Pricing, the system of Support Prices and Procurement of farmers’ produce in general and Rabi crops in particular and also place our suggestions for your consideration. We hope the CACP will consider these proposals seriously and take immediate steps to generate confidence and a sense of security amidst the cultivating peasantry.

• The country is faced with the prospect of a delayed monsoon which according to forecast of the Indian Meteorological Department will also result in less than normal rainfall. The impending impact of the El Nino Effect is also expected to cause erratic rainfall, untimely rains and drought like conditions. Large parts of India are facing an intense heat wave which is likely to extend for at least another fortnight. Temperatures are over 5-6° Celsius above the normal in States like Rajasthan, Maharashtra, Andhra Pradesh, Madhya Pradesh and elsewhere. Studies indicate that a 2° Celsius rise in temperature could lower yields by 15-20 percent and in the case of Wheat reduce yield by over 750 Kg/hectare. According to reports water levels in reservoirs of Southern India are below the 10 year average at only around 16 percent of the live storage capacity. Ground water levels vital for irrigation has drastically dropped by about 4 metres in Delhi, Rajasthan, Punjab, Haryana, Karnataka and Tamilnadu in the last one year. The intense summer heat is likely to further draw down water levels in reservoirs. In such a context the Government must take immediate steps to incentivise the cultivating peasantry. Remunerative Pricing is a significant factor acting as an incentive.
• A contingency plan to deal with such an eventuality must be in place and remedial measures must be taken up on a war footing. Distribution of quality seeds and other inputs at subsidised rates, interest free loans, a programme for replenishing the soils as well as ameliorating conditions of alkalinity, acidity etc at Government expense and adequate employment opportunities under the MGNREGS at wages not less than Rs.300/day must be ensured. Water harvesting, check dams and scientific water management, recharging as well as protection of water bodies and dissemination of better agronomic practices that save water must be given priority. The Commission must take into account the fact that the Farmers are faced with the risk of crop losses due to adverse climatic conditions and their earning will be proportional to the crops they are able to save from damage. The weather based insurance must be made effective and steps for decentralised scientific storage facilities are essential. A comprehensive plan must be put in place with an increased allocation to agriculture as well as enhanced subsidies. In the context of huge subsidies to Farmers in developed countries the policy framework must be reoriented towards increasing subsidies to Farmers manifold.
• The stated objective of the Government’s price policy for agricultural produce is to ensure remunerative prices to the farmers for their produce and thereby to encourage higher investment and production. In reality leave alone getting remunerative prices, the farmers are not even able to realise the costs of cultivation rendering agriculture unviable. Often the MSP announced does not even meet the Cost of Production for most crops. It does not take into account the exorbitant increase in input costs and the cost of Production is computed on the basis of outdated data provided by the Directorate of Economics and Statistics. The Government policies have led to increased input costs and due to the decontrol of fertiliser sector the prices of fertilisers have risen manifold. Increasing prices of diesel and electricity has made irrigation and other farm activities much more costly. Any shortfall in rain will further increase irrigation costs. In addition it also hurts the hydro power generation leading to a rise in farm demand for diesel. The pricing will fail to meet its objective of providing confidence to the farmers if it does not reflect these factors as well as prevalent costs of agricultural inputs in the market and provide a reasonable margin over the Cost of Production as suggested by the Swaminathan Commission.
• Unless a consensus is arrived at on the computation of costs of production with wide consultation and field studies by a broad-based Committee to replace the mechanical computation of MSP by merely adding a small percentage to the Cost of Production computed by the DES the Government efforts will not generate any confidence. AIKS had repeatedly been demanding the setting up of a Joint Committee to look into the issue of computation of costs. However, while the Government has agreed to the demand and set up a Committee it involves only some NGOs and Government representatives and has not involved AIKS which is the largest organisation of the peasantry or many organisations working in different States. This anomaly needs to be corrected.
• Unfortunately the CACP recommendations do not reflect the recommendations of the States as well as the Farmers’ representatives. This has to be rectified and AIKS is of the opinion that the CACP should be transformed from a mere advisory body to a broad-based Statutory body involving representatives of the peasantry and States, social scientists and experts. Its recommendations should be binding on the Government. The CACP is also consistently talking about reducing the crop basket. AIKS reiterates that on the contrary there has to be urgent efforts to widen the crop basket under the purview of the CACP and procurement of the same should be ensured. At present MSP excludes important crops like basmati and premium rice varieties, chilly, areca-nut, spices, castor, other oilseeds, aromatics, cash crops, traditional staples etc, thereby leaving the producers at the mercy of private traders. Minor Forest Produce must be procured at remunerative prices from Tribal people as it is their main source of livelihood and avenues for value addition must be ensured.
• The Indian peasantry can be protected from vagaries of the volatile world market prices only if the Government puts in place an effective procurement policy complemented by remunerative support prices. It also entails a complete ban on Futures Trading. It is required that certain measures like revamping the Marketing Boards or making certain allocations for building a Price Stabilization Fund as suggested by the National Commission of Farmers has to be implemented. The decision to allow FDI in Retail Trade has to be revoked.
• There must be timely fixation of MSP and it must be mandatory upon the Government to announce the MSP well before the crop sowing season. In addition to timely fixation of MSP there is need for timely procurement and the Food Corporation of India as well as other Governmental agencies involved with procurement should stay and involve with procurement for a longer period. An effective procurement mechanism complemented by a Universal Public Distribution System is indispensable if the farmers have to be led out of the present crisis. Procurement by the Government bodies has to be enhanced. Public procurement operations must be expanded and Farmers’ Cooperatives and Self Help Groups must be also drafted into this activity. The restrictions imposed on procurement through Panchayats and State Corporations has to be revoked and such efforts should be encouraged by having incentives to encourage better performers.
• The middlemen and big traders control the dynamics of the local Mandis making it impossible for farmers to get a fair deal. There has to be stringent regulation of activities of such elements. The dilution of APMC Act to favour big organised retailers must be reversed and Farmers’ Cooperatives, SHGs as well as Panchayats must be engaged for Marketing. Storage and agro-processing facilities must be modernised and augmented. Timely procurement should be complemented by an adequate storage mechanism to ward off problems arising out of erratic climatic conditions and ensure sufficient quantity can be procured at remunerative MSP. Agro-processing and value addition is indispensable for making agriculture more viable. Special attention to address the problem of perishables is required. There is hence a need for augmentation of storage facilities including cold storages and also facilities for agro-processing under the Cooperative sector giving encouragement to Farmers’ Cooperatives and Self-Help-Groups.
• An alteration in the situation of persistent agrarian crisis can be possible only if the farmers are assured of truly fair and remunerative prices. Immediate steps to rein in costs of inputs and provide them at subsidised rates are also necessary. Input prices must be regulated and Fertiliser prices must be frozen at pre-Nutrient Based Subsidy rates. The recent WTO Ministerial decision on agricultural subsidies is against the interests of Indian farmers and India must refuse to abide by it. Unequal Free Trade Agreements and Trade Liberalisation measures must not be implemented. Dumping of cheap agricultural produce from other countries must be disallowed.
• Despite our proposals demanding a substantial increase in Minimum Support Prices (MSP) the Government decided to fix meagre MSP for Rabi crops of 2013-14 season to be marketed in 2014-15. It has not taken into account the uncontrolled rise in input costs over the last few years and betrays millions of Farmers who already are in a dire crisis. The MSP of wheat has been fixed at Rs. 1400 per quintal, marking an increase of merely Rs. 50 per quintal over the last year’s MSP. Notably the projected all India weighted average Cost of Production for Rabi 2013-14 for wheat according to the Commission for Agricultural Costs and Prices (CACP) is Rs.1138.80/Qtl. It is to be noted that the weighted MSP for wheat that was recommended by States for the Marketing Season 2013-14 was Rs.1868/Qtl. The AIKS demands that the MSP of Wheat should not be less than Rs.2000/Qtl for it to incentivise farmers to produce more.
• The MSP announced for Gram, Masur, Mustard, Barley and Safflower are also way below the expectations of the farmers. The MSP of barley has been raised only by Rs 120 per quintal and fixed at Rs.1100 per quintal. This is despite the fact that the MSP of barley has not been raised at all for the marketing years 2012-13 and 2013-14. The MSP’s of gram and masur (lentil) have been raised by Rs. 100 per quintal and Rs. 50 per quintal respectively over their last years MSPs and fixed at Rs. 3100 per quintal and Rs. 2950 per quintal respectively. The MSP of rapeseed/mustard has been increased by Rs. 50 per quintal and fixed at Rs. 3050 per quintal while the MSP of safflower has been raised by Rs. 200 per quintal over the last year’s MSP and fixed at Rs. 3000 per quintal. This is way below even the CACP’s projected all India weighted average Cost of Production for Rabi 2013-14 for safflower which is Rs.3501.21 per quintal. The projected all India weighted average Cost of Production for Rabi 2013-14 for other crops are given below. Since we are calculating the MSP for Rabi Marketing Season 2015-16 we should appropriately compute the costs and give farmers their due. AIKS proposals are given below for your consideration.

We hope you will look into the issues raised above and take immediate steps in the best interests of the peasantry.

Thanking You,

Sd/-

Amra Ram, President

Hannan Mollah, General Secretary