MSP Explained for Dummies. And No, its Not Equal or Comparable to MRP

We knew what an MRP was. Even an MCP, thanks to the feminists. But our familiarity with MSP is quite recent. Thanks to the widely discussed and debated farm bills and the collective meltdown of people who are otherwise extremely concerned about our economy.

Anyone who has skimmed through the acts as well as done some research on the Swaminathan and Shantakumar committee reports would give an unprejudiced opinion that the laws are extremely farmer friendly. At times unfairly so.

But people with serious economic and environmental concerns can rarely shed their prejudices while judging an administration that genuinely seeks to bring about reforms that will empower farmers , improve the agricultural infrastructure yet reduce the burden on state ex chequer by widening the market , ensuring seamless digital transactions and bringing in private investors to share the burden .

These are the very same people who quote Raghuram Rajan on benefits of free market economics sometimes even out of context. But the moment the same options are given to the farmers to access markets, Mandis, ware houses , exporters outside the designated areas to acquire the best available price for their produce, they instantly develop cold feet wondering about the loss of revenue for state APMCs.

These are the same people who wax eloquence on the need to develop farming infrastructure. For better yield, implementation of modern farming techniques, use of better seeds and fertilizers but see the investment and inroads of corporates into the sector as some evil design to privatize farmlands.

Depriving the gullible farmers of their ownership of land and dictating them terms of contract. This , despite written government assurances of better speedier redressal of any dispute and local bodies to be set to oversee negotiations being fairly conducted. I don’t think it’s the corporates but they themselves who wish to spread misinformation to misguide the gullible farmers for their own ulterior motives.

These are the same people who accuse the government ineffectiveness to control stubble burning and yet support landowner’s protest to release those who have been imprisoned for brazenly flouting those rules.

They have been crying hoarse on non-assurance of MSP despite government announcing the minimum support price for the next Rabi season.

For starters: MRP and MSP are two DIFFERENT concepts.

MSP is the minimum support price is an agricultural product price set by the Government of India to purchase directly from the farmer,” while,  MRP is the maximum retail price is a manufacturer calculated price that is the highest price that can be charged for a product sold in India.” 

According to the Shanta Kumar committee report out 23 designated crops for MSP only 1 was sold at its full MSP (fixed by Swaminathan committee which included price of production +50% profit=A2cost of production + opportunity cost of any family member who was working on farm but could have worked in any other scheme like MNREGA etc( Fl) + interest on the capital invested in agriculture + land rent ( C2). In most crops usually MSP is procured for A2 +50% of A2 . Whereas recommended MSP should be A2+Fl+C2 + 50% of the entire amount.

Just 15% wealthy farmers who have the facility of proper mandi network can access the MSP the rest farmers haven’t even heard of the term. The states which were beneficiary of green revolution with designated large mandis situated within 5 KM radius of farmlands already have the infrastructure in place along with intermediaries whose connections in power corridors ensure that they can easily fill up the government procurement quotas to the detriment of the rest of the farmers in India.

This however does not seem unfair to those vociferous in venting that the laws are anti farmers in general. To them the prosperous landowners holding the capital and government to ransom find ever kind of justification to carry on with their ways.

Even those who can attain government procurement requirements could only get 27 to 30% of the recommended MSP for their produce. This is an admission by the farmers themselves which is documented in the committee reports. Implying corruption involved. The present bills are aimed at making the process much more transparent with direct cash transfer to farmer’s accounts ruling out any intermediary involvement that has sent alarm bells ringing in the community of a thriving middle men business. The 0 transportation cost promise has also unsettled the political families of Punjab who have minted fortunes by establishing lines of trucks to transport farm produce to markets.

To those who oppose every policy irrespective of their merit just because it has been brought about by BJP should understand how misplaced their own credibility is when they argue on unsubstantiated facts just for the sake of it. No administration is flawless. Much will still be lacking when these laws get implemented. A constructive criticism on that would have been a lot more fruitful than mere brazen obstructionism in support of a corrupt incumbent eco system of decades.

Researched and compiled independently by Tanuka Banerjee.

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