Legalise MSP to secure farmers' lives

Finally, the Haryana government has agreed to pay a ‘fair’ price to sunflower farmers for their produce. This is exactly what the protesting farmers were demanding, and this is what the state government was earlier denying.

Behind the unsavoury incidents that led to farmers staging a protest blocking the Chandigarh-New Delhi highway a few days back, police resorted to a lathi-charge to clear the road and take farmer leaders into custody. The protestors followed this up with a bigger call for unity, primarily to demonstrate their strength and at the same time to seek a legitimate price for the sunflower crop.

While the Haryana government claimed that it was paying farmers with a deficiency payment under the ‘bhawantar’ scheme, farmers were steadfast on the crop being procured at the Minimum Support Price (MSP) that had already been announced. Against Rs 6,400 per quintal as the MSP, farmers were being forced to sell at a distress price, ranging between Rs 4,200 and Rs 4,800 per quintal. Even with a deficiency payment of Rs 1,000 per quintal that the State government had promised, farmers were still losing Rs 600 per quintal or more. This infuriated the sunflower cultivators and rightly so.

From initial refusal to purchase sunflower at the MSP, the agreement to pay a ‘fair’ price and that too after the protesting farmers had taken to the streets is a reflection of the inherent bias the governments continue to have against farmers. Although the roots go back to the days when the Bombay Club, a group of industrialists that came together sometime in the 1930s to work towards ensuring that food prices are kept low so as to keep the wages low, the dominant economic thinking over the years has been to keep food prices low by deliberately keeping agriculture impoverished. Agriculture is therefore being sacrificed to keep the economic reforms viable or in other words allow companies to rake in profits.

Coming to the Haryana incident, I don’t understand the logic behind first refusing to accept farmers’ rightful call for the right price, and then after an ugly scuffle on the streets, take a U-turn and agree to pay a ‘fair’ price. Wonder why this couldn’t have been done earlier.

After all, MSP is the right of farmers and it cannot be denied. If the State government had done its duty I am sure there would have been no reason for farmers to come out protesting on the national highway.

I have never seen corporate honchos protesting at jantar mantar in New Delhi to get their bad loans written-off? How come Rs 12-lakh crore worth of toxic corporate debt for ten years gets struck-off the bank registers without any protest? As if this is not enough, the Reserve Bank of India (RBI) has allowed a ‘compromise settlement’ for wilful defaulters, who have the capacity to pay but they don’t, to get loans afresh after a year. While farmers are routinely sent behind bars for defaulting on farm loans, the RBI acts as ‘kavach’ for the crony capitalists. I am glad, while mainline economists have been conspicuously quiet at this distortion, the bank associations have been openly questioning the RBI motive.

The bias is also apparent in economic analysis. In an article in Hindustan Times, headlined ‘Modest MSP hike is a tightrope act by govt’, two economists have worked out the modest hike in MSP for Kharif crops for 2023-24 marketing season at an additional seven per cent to the weighted average for food basket in the Consumer Price Index (CPI). This is incorrect because the marketing season is yet to begin, and it is premature to extrapolate the increase in prices to the entire harvest given that only 14% of crops are procured at MSP in a year. Much of the trading in 86 per cent of the remaining crops will be less than the MSP. This also means that the large spikes seen by way of MSP price hike in the pre-election years earlier too were incorrect.

On the other hand, those who blame farmers for blocking highways and rail tracks at the drop of a hat must also shun their inherent bias. The troll often lashes out at protesting farmers calling them habitual offenders. As if farmers drive a sadistic pleasure in blocking highways. This is rather uncharitable, and speaks volumes about the ignorance the city-bred have towards the countryside. Examine the farmers protests across the country case by case, and you’ll see how they have been wronged. They are the victims of an economic design that in reality aims to push them off the land. Mainline economists and bureaucracy have rarely seen farmers beyond the roles of being a land bank and a labour bank.

Farmers are left with little choice but to brave lathis to get the right price for their produce.

This brings me to the bigger question as to why policy makers are reluctant to provide a guaranteed price to farmers.

This is primarily because ‘Economic 101’ in the college curriculum has programmed us to believe that the markets provide the best prices. In fact, I am dismayed when I notice even some opinion makers challenging the need to provide farmers with price assurance. If it is alright for farmers to get a market price for sunflower at Rs 4,800 per quintal as against the MSP of Rs 6,400 per quintal, I wonder how the top bureaucrats would react if they were to be paid salaries equivalent to what the junior officers are entitled. Similarly, if the senior most Army officers were to get salaries equivalent to that of two ranks below, there would be loud protests.

Farmers too are part of the same society. They too need to be paid adequately for their hard work, good enough to provide them with an economically viable and profitable income. I have already shown that while the basic salary of government employees has gone up by 120 to 150 times in the 45-year period, between 1970 and 2015, farm incomes, if MSP for wheat is an indicator, have only risen 19 times. This huge gap in incomes only points to the deliberate attempt to keep farm incomes within the confines of the macro-economic indicators.

In other words, by keeping food prices low to keep food inflation low, farmers have traditionally been carrying the burden of maintaining economic stability. This has to change. Farmers too need income parity. This is possible only if MSP is made a legal instrument, ensuring no trading takes place below this benchmark price.

(The author is a noted food policy analyst and an expert on issues related to the agriculture sector. He writes on food, agriculture and hunger)