MSP fails to read farmers’ pulse

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New Delhi | Updated: June 19, 2015 5:46:57 AM

MSP mechanism may have spurred production of rice and wheat but it has had marginal to nil impact on the production of other crucial agricultural commodities like pulses and oilseeds...

minimum support price, pulsesThe minimum support price (MSP) mechanism may have spurred production of rice and wheat but it has had marginal to nil impact on the production of other crucial agricultural commodities like pulses and oilseeds, the deficit of which is met by expensive imports. (Reuters)

The minimum support price (MSP) mechanism may have spurred production of rice and wheat but it has had marginal to nil impact on the production of other crucial agricultural commodities like pulses and oilseeds, the deficit of which is met by expensive imports, reports Sandip Das in New Delhi.

The low utility of MSPs, despite their religious annual revisions, has primarily to do with the virtual absence of the state procurement machinery for crops barring rice and wheat. Production of the two staple grains, which have benefited from a skewed incentive policy, have seen considerable increase over the past decade, whereas pulses output has almost stagnated. While experts vouch for a crop-neutral incentive structure, the Food Corporation of India, perennially troubled by delayed subsidy payments from the government, has long demanded that unless payments are made to it upfront, it won’t be able to purchase all commodities for which MSPs have been fixed, from the farmers. Pulses prices have already sky-rocketed in recent months on reduced supplies. Even last year, domestic shortage of these items, a key source of protein, led to record imports of $2.8 billion.

(The wholesale price sub-index concerning pulses rose nearly 23% in May, the fifth straight month of double-digit inflation, even when the overall primary food inflation was just 3.8%). “…direct buying of pulses from farmer groups needs to be encouraged by private-sector organised industry/ retail groups, or by a wing within the FCI, and through warehouse receipt systems.

msp

“This is to give farmers a higher share of the consumer’s rupee as an incentive to produce more pulses,” former the Commission for Agricultural Costs and Prices chairman Ashok Gulati wrote in an FE article on Thursday. He added that although good technology would increase yields of pulses in due course, in the short to medium run, bringing more pulses’ area under irrigation could help stabilise their yields at a reasonably satisfactory level. For this to happen, he added, policy must reward those ready to shift to pulses, especially in the Punjab-Haryana belt, where the water table is fast depleting.

While the agriculture ministry’s Price Support Scheme, under which agencies such as farmers’ cooperative Nafed, the Central Warehousing Corporation, National Consumer Cooperative Federation of India (NCCF) and Small Farmers Agro Consortium are designated to undertake procurement operations for pulses and oilseeds when prices fall below MSP, in reality these agencies hardly have the wherewithal to perform the task.

In 2013-14, for instance, Nafed procured just 84,452 quintals of pulses (tur and urad) and 4.6 lakh quintals of oilseeds (mostly groundnut) from farmers. The high-level committee on FCI restructuring headed by Shanta Kumar had stated that only 6% of the country’s farmers got the benefit of MSP operations.

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