Farmers’ Protest 2.0 Explainer: Two Views on MSP

28
February
2024

The main demand of the protesting farmers is a legal guarantee on Minimum Support Price (MSP). Here are two contrasting views on MSP by two experts. Professor Sardara Singh Johl, former Vice Chancellor of Punjab Agricultural University says MSP is beneficial for farmers only when it is higher than the market rate, and stressed the need to benefit small farmers. ‘About 60 countries of the world provide direct subsidies to farmers. The govt. cannot give MSP on all 23 crops. It is not possible to implement it.’ Johl said that in 2021-22, the United States gave more than $42B to the farmers. His argument is for subsidies, not MSP. Professor Himanshu from Jawaharlal Nehru University says, ‘There was similar fear mongering during the run-up to the enactment of the National Food Security Act (NFSA) and the National Rural Employment Guarantee Act. The reality is that neither of these pieces of legislation has bankrupted the govt. Instead, they proved to be a lifeline for people during the pandemic. MSP-like mechanisms are available to farmers in other countries. The purpose is to insulate farmers from price volatility with govt. actions through active intervention when the market prices fall below the MSP. While the govt. announces MSP for 23 crops, it is in practice only implemented for rice and wheat, and occasionally for pulses and other crops. In these cases, market intervention by the govt. is not done to support the farmers, but to fulfill the statutory requirements to fulfill its obligations under NFSA. Farmers are only demanding that the govt. implement the MSP scheme as envisaged.’ Basically, the current MSP is for consumers, farmers want it for producers. It is important to note that the 'high price' of MSP is a myth, as determined by rating agency CRISIL, the real cost is only $2.5B (SDW Vol.2 Issue 8, Story 5).

Photo by Ranjitnu

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