Farmers across many States, including Madhya Pradesh and Maharashtra, are up in arms demanding implementation of the National Commission on Farmers report, which suggested fixing the minimum support price (MSP) for crops 50 per cent above the cost of production.
But the MSP of many crops already has a built-in profit margin of 40-50 per cent. So, what is behind the angst of farmers?
For the kharif marketing season 2017-18, the CACP (Commission for Agricultural Costs and Prices) has projected the all-India average cost of paddy at ₹1,117/quintal (including family labour) and recommended an MSP of ₹1,590/quintal, a margin of 42 per cent for the farmer.
In maize (36.9 per cent), paddy (38.7 per cent), bajra (50 per cent), tur (58 per cent) and urad (59 per cent), too, there is a profit for the farmer.
In fact, in tur, urad and moong, the Centre has announced an additional bonus of ₹200/quintal, which increases profits for the farmer.
While the Centre’s projections are upbeat, not many farmers are able to realise these profits. One reason could be that only a few commodities get the government-fixed MSP. For instance, fruits and vegetables do not have support prices. But even in crops where there is procurement, farmers feel short-changed.
Higher cost of production
This is because the cost of production of various crops differs from State to State and from farmer to farmer. But CACP averages the costs of all the States to fix the MSP for a crop. So, farmers in States with a higher cost of production are unable to get a healthy spread over the guaranteed price.
Take, for instance, labour costs. Last year, the daily wage rates for agri labour were ₹180-200/day in Madhya Pradesh, but ₹360-380/day in Haryana and ₹660-670/day in Kerala.
CH Ganga Reddy, who owns eight acres in Nizamabad and cultivates turmeric, maize and jowar, says: “Labour is expensive now. But, even if we are willing to pay more, we are not getting labour to work on our land as they prefer MNREGA…”
Other costs of production also vary by State depending on the fertility of the soil, weather, pest attacks, and quality of seeds.
In Bihar, for instance, maize seeds cost ₹3,100/hectare in 2014-15, CACP data show. But in the same year, the cost of the seed in AP was ₹5,099/hectare. Similarly, for soyabean, the total cost of fertiliser and manure used in 2014-15 was ₹2,959/hectare in MP while it was ₹4,919/hectare in Maharashtra.
Second-grade produce
Farmers also end up selling at least a third of their produce much below the MSP as they can’t meet the quality specifications of government agencies. Bhumaa Reddy, a farmer from Munapally village in Nizamabad, says: “Sometimes State agencies procure paddy and maize, but they do not take the entire produce at the MSP. They reject it if quality is bad, so we are left to the mercy of traders.”
This is the case with other crops, as well, say farmers. “When there is no benchmark price for produce of grade II/III varieties, traders exploit farmers by quoting sharply lower prices,” says Ayush Sharma, co-founder of Cosmos Green Kisan Maitri, an FPO in Telangana.
Low marketable surplus
The other reason farmers don’t find MSP attractive is that the marketable surplus of many farmers is small. With an average holding of 1-2 hectares, their marketable surplus after family consumption is low. They find the income from the crop barely enough to pay for the livelihood of 3-4 family members.
Also, as these farmers work on leased lands, their cost is higher because of lease rentals.