Farmer’s agitation was started in Kapurthala when the Haryana government repudiated buying sunflower seeds from farmers as per the MSP of Rs 6,400 per quintal, while the market price per quintal hovered around Rs 4,000 to 4,800.Perturbed by a huge loss of nearly Rs. 2,000, sunflower farmers from Kapurthala, Ambala, and neighbouring Punjab resorted to blocking the Chandigarh highway and demanded the state government to compensate the price loss and purchase the harvest for Rs. 6,400.However, after nearly two weeks of agitation led by the united Farmer’s body SKMU, the state government asked farmers to sell their produce at the prevailing private market rates, promising to compensate them with an additional Rs1000 per quintal as bhavantar (the difference between the market rate and MSP/SSP).

India is facing a severe scarcity of vegetable oils. Mustard farmers in Haryana have incurred a staggering loss of Rs 20,000 crore in this season alone due to unfair prices. The monoculture of rice and wheat cultivation, excessive use of groundwater, and farm fires should be discouraged by the government. The farmers should be to substitute these crops with the cultivation of oil seed, millets, and pulses. Not only sunflower but the price of other crops like mustard, soybean, red gram, and mangoes, are flattened forcing farmers to resort to distress sales at a cost lesser than the expense of cultivation.

The underestimation of the cost of production by the CACP (Commission on Central Agricultural Costs and Prices functioning under the Union Ministry of Agriculture and farmers welfare) is forcing the farmers to run on a loss of huge sum. While the farmer is pushed to distress, all other players in the market, the middlemen, wholesale & export traders, and supermarket corporate agribusiness value chains are ironically earning super profits. It is even suspected that the announced prices in the market are kept deliberately low to benefit all other players in the market at the expense of the farmer.

The recent announcements of MSPs for various crops for the current Kharif season are very meagre. From Rice, wheat to Jowar, and cotton the average increase of announced MSPs hovers between 4 to 8 %.Despite the present government’s loud promises of profitable crop procurement prices and doubling of farmers’ income during the period 2014- 22, the average annual increase of different crop MSPs oscillated between 4to 8.1 %. While during the former UPA regime (between 2004 to 2013)the annual increase ranged between 7.2 to 11.3 %. The increase announced for Kharif in 2023 is Rs 2183per quintal (7.4 % against Rs2040 of the previous season), and wheat Rs 2,260.

Government procurement is limited to paddy and wheat. (Mostly from states of Punjab, M.P, Haryana, UP, Karnataka, Telangana, A.P, West Bengal, and Chhattisgarh). Crop MSPs announced by the Union government ensure to rise the slab and fetch relatively higher prices in open markets. A vast majority of small, tenant farmers sell at harvest time desperately sell their produce at low rates much below the government MSPs to millers and middlemen, as they cannot pay for transport to reach far-off market yards.

Although the Union government says its announced prices cover all costs of cultivation, the A + F2 formula(crop cultivation cost plus family labour),conveniently ignores all other expenses incurred by the farmer. M.S. Swaminathan Commission had recommended a formula‘C2 + 50%’, that covers a comprehensive total of cultivation costs with added 50percent of C2.

In two ways the government announced MSPs are miscalculated. Firstly, CACP considers the prices from the financial year2012-13 as the basis of calculation not the price from the previous season. The prices of fertilizers (especially DAP and Potash), diesel, pesticides, transport, and land preparation costs have increased by 2.5 times during the last 10 years. But the Commission still holds on to old prices thus artificially lowering the cost of cultivation.

Among the Kharif MSP announced for 14 crops by the union cabinet this month the average increase for rice, wheat, and other crops is around only 7.4 percent. Only sesame and green gram touched a 10 percent increase. This year, CACP calculated and recommended the MSPs using the formula A + FL(crop cultivation expenses plus family labour). But Dr. Swaminathan’s commission suggested the formula C2 +50 percent of (C2, the total or comprehensive costs of cultivation) includes the cost of all crop cultivation expenses, tenancy rent, interest on the capital cost of land, tractors, and other investments. While CACP suggested ‘A’ was calculated based on immediate prices of fertilizers, diesel, and others from the immediate last season but the base remains in the prices of 2012-13. During the ten-year period, prices have increased nearly 2.5 times. Also, the whole family (an average of 4 members) toil in the crop season, postharvest operations, and working days for two members during the crop season should be considered.

The gap between A+ FL and C2 + 50 % makes a huge difference. For rice (at 2022 input prices) per quintal MSP should be Rs. 3,340instead of Rs 2,183 as announced by the government. While Subodh Varma & Peeyush Sharma in their article used 2012 input prices calculated using C2+ 50 % at nearly Rs. 2,700 per quintal of rice. Thus, the total loss incurred by farmers due to faulty calculation of MSP by CACP for rice during the last5 years alone amounts to Rs2.40 lakh crores. For wheat, the loss amounts to nearly58.5 thousand crore rupees. Calculations using crop input costs from the immediate previous season the loss alone for rice and wheat totals would be around 4.0 lakh crore rupees per year.

The estimated losses from the gap in computation amounts are cotton (Rs 2,089), Bajra (Rs. 206), Jowar (1969), Moong (Rs 2,269) per quintal and not including other crops like mango, groundnut, soybean, maize, and others. All this margin amounting to lakhs of crores arising from price imbalance, which is denied to farmers in the market is pocketed by middlemen, wholesale grain traders, supermarkets, and export corporate agribusiness syndicates. This is the reason why every component in the Agro sector except the farmer makes profits.

To mask the above-described loss, present and previous governments doll out regularly nominal and colourful incentives to farmers from time to time. For example, the recently released instalment of Rs6,000 to 11 crore farmers under the PM Kisan scheme is yet another “Jumla”. This dole and low MSPs only cover a fraction of the huge losses incurred by farmers in every crop season. By giving PM Kisan money, the government has totally withdrawn all subsidies on fertilizers, irrigation, electricity, crop insurance, relief upon crop losses from natural disasters, etc.

All India Kisan Sabha, SKMU, and other farmer organizations have been demanding legal guarantees for announced MSPs to relieve farmers up to a certain extent. As 70 percent of the population lives in villages, attaining five trillion-dollar economy will be possible only by raising rural incomes and expansion of demand. (IPA Service)