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As the Government faces the double whammy of containing inflation and farmers demanding higher minimum support price (MSP), Commission for Agriculture Costs and Prices (CACP) Chairman Ashok Gulati says the situation is ‘difficult’. While it is not possible to give the farmers what they are asking for, their protest is justified to ‘certain extent’.
“Product cost is going up very fast. But increasing MSP would disturb the dynamics of both agriculture and market. What needs to be done is either the government should provide the farmers a free market by allowing export of excessive grain or the ‘profit component’ in the MSP should be increased to 16 per cent above the input cost provided that the farmers focus on increasing productivity and cut their input cost by 4 per cent,” says Gulati. At present the profit component is 8 per cent. MSP is calculated as input cost plus profit. The farmers are asking the Government to adopt MS Swaminathan formula: input cost plus 50 per cent.
MSP is minimum support price, it is not maximum support price. If it is increased too high, the consumer price would increase which will have cascading effect on farmers also.
He says the Government can allow export of 3-5 million tons (MT) of rice and wheat each as the stocks have excessive grain. This will help farmers get good returns. The central pool is roughly around 64 MT, an all time high.
Gulati expresses concern that production cost is increasing too fast. For instance, wages have gone up by 60 per cent in the last 3 years due to MGNREGA and construction work of developmental projects across the country. Diesel prices have gone up by 40 per cent in a single year.
“Going forward, the challenge is to get maximum out of minimum. Our land size is decreasing, production cost is increasing and we have to feed more number of the people with these constraints. The farmers should use high yield hybrid varieties and cut their cost through mechanisation,” Gulati adds. Farmers say pesticides cost has gone up by 150 per cent, seed 75 per cent, fertilizer 50 per cent and diesel 75 per cent which is not reflected in the Government MSP.
“Product cost is going up very fast. But increasing MSP would disturb the dynamics of both agriculture and market. What needs to be done is either the government should provide the farmers a free market by allowing export of excessive grain or the ‘profit component’ in the MSP should be increased to 16 per cent above the input cost provided that the farmers focus on increasing productivity and cut their input cost by 4 per cent,” says Gulati. At present the profit component is 8 per cent. MSP is calculated as input cost plus profit. The farmers are asking the Government to adopt MS Swaminathan formula: input cost plus 50 per cent.
MSP is minimum support price, it is not maximum support price. If it is increased too high, the consumer price would increase which will have cascading effect on farmers also.
He says the Government can allow export of 3-5 million tons (MT) of rice and wheat each as the stocks have excessive grain. This will help farmers get good returns. The central pool is roughly around 64 MT, an all time high.
Gulati expresses concern that production cost is increasing too fast. For instance, wages have gone up by 60 per cent in the last 3 years due to MGNREGA and construction work of developmental projects across the country. Diesel prices have gone up by 40 per cent in a single year.
“Going forward, the challenge is to get maximum out of minimum. Our land size is decreasing, production cost is increasing and we have to feed more number of the people with these constraints. The farmers should use high yield hybrid varieties and cut their cost through mechanisation,” Gulati adds. Farmers say pesticides cost has gone up by 150 per cent, seed 75 per cent, fertilizer 50 per cent and diesel 75 per cent which is not reflected in the Government MSP.
