With the rise in Minimum Support Price by 50 percent, it was anticipated that the prices would go up. Although the MSP is aimed at eliminating the middleman, they largely remain unaffected. Farmers continue to sell their produce to the wholesale traders.
Minimum Support Price is the assured price by the government for farm produce. The government determines the prices for around 25 agricultural commodities ahead of the sowing season, every year.
For instance, the Haryana government set the MSP for potatoes at Rs. 4 per kg in the last given fiscal. This is way below the estimated production cost of potatoes at Rs. 9 per kg. Satish Kumar , 32, is a farmer in Kheri Gaon in Haryana. “Why should I settle for the MSP? I cannot make a profit out of it. I prefer selling my produce to the wholesalers. Even though I may get a price of Rs. 7 and still run a loss, it is a better bargain.’ says Satish.
Although the government aims to ensure earnings to the farmers, it has failed. In January this year, farmers dumped surplus potatoes on the streets of Uttar Pradesh as there was no warehousing facility for the bumper harvest.
Surinder Kumar, Deputy Secretary of the Agriculture Produce Market Committee says, “The farmers still prefer to sell their produce to us. The MSP is provided by NAFED (National Agricultural Cooperative Marketing Federation of India) , which only takes a certain grade of vegetables. The middle and lower quality of vegetables come to our market”. Further, perishables (vegetables apart from onions and potatoes) are difficult to store for the farmers. They prefer to sell it soon, rather than waiting for the government to procure it.
The government in the Union Budget speech, announced that the government would make sure the farmers are paid 1.5 times the cost of production for all kharif season crops. However, farmers remain sceptical about the implementation.
The government pays the farmers through cheque, which the farmers are still reluctant to accept as the mode of payment. Farmers prefer cash in hand rather than waiting for three to four days for the cheque clearance. “Some farmers are also duped, since the issuing officer could write any amount on the cheque and the farmer would not know until he has returned to his native place and submitted it in the bank.”, says Kumar.
However, Kumar admits the government has benefits of economies of scale. Proper implementation could prove to be a competition to the open market. He says, “For instance, the onions we buy from Nashik that are brought to Delhi using 3-4 trucks are brought by the government through railways. The government saves on freight charges and time.”