On the recommendations of the Commission for Agricultural Costs and Prices (CACP), the government has recently announced a 6-16% hike in minimum support prices (MSPs) for the rabi crop. MSPs had seen huge hikes during the UPA government’s tenure, but the annual increases have moderated after the Modi government took over. Vijay Paul Sharma, who took over as chairman of CACP in June this year, has his task cut out to balance domestic and global prices while recommending MSPs. Sharma spoke to Sandip Das on issues concerning providing remunerative prices to farmers. Excerpts:
How do you want to approach determination of MSPs for paddy and wheat in the next couple of years?
Although the CACP analyses the world market trends in terms of prices and demand-supply situation, other factors like cost of production, terms of trade, inter-crop price parity, efficient utilisation of natural resources like land and water etc also need to be taken into account. We also need to ensure that farmers get remunerative prices and incentivise them to adopt modern technologies and raise productivity and production.
I think too much focus on price policy alone is neither desirable nor feasible. Price policy is one of the most important policy instruments to achieve high growth in agriculture, but prices by themselves have a limited role. As non-price factors like technology, inputs, services, institutions and infrastructure play a dominant role in agricultural growth, we need to have the right mix of price and non-price factors. We need to focus on improving productivity, diversification of agriculture into high-value commodities and value addition, reducing cost of cultivation and post harvest losses by creating appropriate logistics and infrastructure in addition to remunerative prices.
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Though CACP recommends MSP for 22 commodities, only a few commodities like rice, wheat, oilseeds, cotton and pulses are procured from farmers by agencies. This leaves out a large number of the farmers from the ambit of MSP regime. What are your views on covering more farmers under MSP regime?
We need to increase coverage of farmers and crops under MSP operations. Decentralised procurement policy (DCP) was introduced by the government in 1997-98 with a view to enhance the efficiency of procurement and public distribution system (PDS) and encourage local procurement to extend the benefits of MSP of local farmers and crops as well as to save on transit costs. Today, the share of DCP states in the total rice procurement is more than 50% and states such as Chhattisgarh, Odisha, West Bengal and Bihar have benefited from DCP operations. However, it has not happened in other crops, including wheat where more than 90% procurement is concentrated in three states — Punjab, Haryana and Madhya Pradesh.
Procurement of coarse cereals has been negligible, but pulses procurement has increased this year. We need very strong and cooperation from state governments to actively engage in procurement operations for which suitable physical and institutional infrastructure needs to be created.
Since you took over as the chairman, what key measures have been initiated?
The CACP is mandated to recommend MSPs of 22 agricultural commodities and Fair & Remunerative Price (FRP) of sugarcane to incentivise farmers to adopt new technologies and improve productivity and overall agricultural production, keeping in mind the emerging demand patterns of the country.
Earlier, we used to hold consultations for deciding MSPs in Delhi, but from this year we have started organising regional consultations for ensuring wider participation of farmers and other stakeholders in the process. A fortnight back, we organised a regional workshop at Chandigarh and we are now planning to hold similar discussions in Ahmedabad, Patna, Hyderabad and Guwahati for ensuring wider regional participation. This will help us in understanding the regional issues and perspectives and formulating an appropriate price policy. In order to make price policy more effective, its important to have strong procurement mechanism covering more number of crops and states.
FCI has already prepared an action-plan for increasing procurement of rice from eastern
UP, Bihar, Jharkhand, West Bengal and Assam. The government has also started procurement of pulses from farmers to ensure remunerative price to pulses growers.