Agriculture

There is no guarantee farmers’ financial gain can rise because the methodology for estimating price of production is outdated, defective

·        The Centre has been announcing MSP for crops each year for 2 seasons — kharif and rabi — since 1965, based on the advice of the Commission for Agricultural prices and costs (CACP).

·        Initially, it had been declared just for wheat and paddy. Over the years, a lot of crops were extra.

·        The MSP is presently offered for twenty three crops.

·        Historically, the MSP is determined supported the value of cultivation, input costs, provide and demand of crops, the value level in world markets, etc.

·        Although the CACP uses 9 totally different price ideas (A1, A2, A2+FL, B1, B2, C1, C2, C2* and C3) for estimating the value of production, the MSP was fixed supported value A2+FL formula until 2018.

·        While the value C3 includes all the expenses incurred for crop cultivation, A2 covers solely the farmer’s out-of-pocket spend on cultivation.

·        That is, value A2+FL (family labour) doesnt take into account the depreciation value of farm machinery, the interest on loans, etc.

·        Therefore, the gap between C3 and A2+FL price is 30-50 per cent for many mandated crops.

·        In such a structure, crop production becomes unprofitable for farmers.

·        So theyre demanding MSPs that cover the complete value of production.

·        MS Swaminathan headed Farmers’ Commission (2006) recommended that MSPs for crops ought to be fixed at fifty per cent higher than the price of production.

·        Given the continual demand from farmers, the govt created a historic announcement in Budget 2018-19 that the MSP are fixed a minimum of one-andhalf times the value of production.

·        Since kharif 2018, the MSP is are fixed based on price A2+FL plus fifty per cent formula.