Hindu Editorial Analysis : 2-March-2024

Recently, farmers in India have called for a legal guarantee for purchasing their crops at Minimum Support Price (MSP). This demand highlights the struggles faced by farmers in securing fair prices for their produce.

Understanding Minimum Support Price (MSP)

MSP is a government intervention designed to protect farmers from sharp declines in crop prices. It aims to prevent distress sales during years of surplus production. Here are some key points about MSP:

  • Market Intervention: MSP ensures that farmers receive a minimum price for their crops.
  • Government Role: The Central Government sets MSP for 23 crops each year before the sowing season.
  • Pricing Formula: MSP is calculated as one-and-a-half times the production costs, which include:
    • Seeds and fertilizers
    • Pesticides and fuel
    • Irrigation and hired labor
    • The imputed value of unpaid family labor

Despite these provisions, there is no legal framework enforcing MSP, meaning farmers cannot claim it as a right.

Farmers’ Demand for Legal Guarantee

Farmers argue that without a legal guarantee for MSP, many will face bankruptcy, threatening India’s food security. Their demand has two main aspects:

  1. Comprehensive Cost Calculation: MSP should be based on the comprehensive cost of production (C2) plus an additional 50%.
  2. Legal Purchases: All 23 crops should be legally purchased at or above MSP by anyone willing to buy.

Arguments for Legalizing MSP

Supporters of a legal guarantee for MSP present several arguments:

  • Addressing Agricultural Crisis: The agricultural sector has faced numerous challenges in recent decades, and legalizing MSP could help mitigate these issues.
  • Nutrition Security: As India moves towards better nutrition security, ensuring MSP can play a crucial role.
  • Price Stabilization: While not all crops need to be bought by the government, purchasing a small percentage (5-10%) could stabilize market prices.
  • Farmer Support: Legal MSP can provide a safety net for farmers, encouraging them to continue farming.

Arguments Against Legalizing MSP

On the other hand, there are concerns regarding the implementation of a legal MSP:

  • Implementation Challenges: Although MSP is set for 23 crops, it is primarily enforced for rice and wheat due to storage capacities.
  • Limited Reach: A report by the Shanta Kumar Committee noted that only 6% of farmers sell their wheat and rice at MSP.
  • Need for Policy Review: Experts suggest a thorough review of agricultural policies to plan for future challenges in agriculture.

Government’s Stand

The Union Government maintains that a legal guarantee for MSP is not feasible. They argue that MSP serves as a minimum price, essential for farmers’ survival. However, concrete steps towards providing this legal guarantee have not been taken.

Why In News

Recently, groups of farmers have united in their demand for a legal guarantee ensuring that they can sell their crops at Minimum Support Price (MSP), highlighting their growing concerns over financial stability and the future of agriculture in India.

MCQs about Minimum Support Price (MSP)

  1. What is the purpose of the Minimum Support Price (MSP)?
    A. To increase agricultural exports
    B. To protect farmers from falling prices
    C. To regulate crop production
    D. To subsidize fertilizers
    Correct Answer: B. To protect farmers from falling prices
    Explanation: MSP is a government intervention aimed at ensuring that farmers receive a minimum price for their crops, thereby protecting them from distress sales during surplus production years.
  2. How is the MSP calculated for crops?
    A. Based on market demand
    B. As one-and-a-half times the production costs
    C. Through international pricing standards
    D. By farmer votes
    Correct Answer: B. As one-and-a-half times the production costs
    Explanation: The MSP is set by the government based on a formula that includes one-and-a-half times the production costs, which take into account various expenses like seeds, fertilizers, and labor.
  3. What are the two main components of farmers’ demand for a legal guarantee on MSP?
    A. Increased government funding and training for farmers
    B. Comprehensive cost calculation and legal purchases of crops
    C. More storage facilities and international trade agreements
    D. Higher subsidies for fertilizers and pesticides
    Correct Answer: B. Comprehensive cost calculation and legal purchases of crops
    Explanation: Farmers are demanding that MSP be based on comprehensive production costs (C2) plus 50%, and that all 23 crops should be legally purchased at or above the MSP by willing buyers.
  4. What is one argument against the legalization of MSP?
    A. It ensures food security
    B. It could stabilize market prices
    C. It is challenging to implement effectively
    D. It encourages farmers to produce more
    Correct Answer: C. It is challenging to implement effectively
    Explanation: Critics argue that while MSP is set for various crops, its implementation is mainly effective for rice and wheat due to logistical challenges, making it difficult to apply universally to all crops.

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