MSP helps farmers from exploitation even while selling to private traders, according to a survey
Only 6% of agricultural households in India sell* their produce at the Minimum Support Price (MSP), latest available data show. Then, why has MSP become a contentious issue? Two surveys show that even in States where there was limited procurement, farmers wanted the MSP programme to continue.
In fact, banning intermediaries, a key promise of the new farm laws, was not among the chief concerns of the farmers. The protests have spilled over to States such as Karnataka, Rajasthan and Tamil Nadu where procurement was relatively lower than in Haryana and Punjab. This shows that farmers fear that the laws pose an indirect threat to the MSP programme, regardless of procurement levels.
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In a 2018 RBI survey, >50% farmers identified “MSPs for crops” as the most helpful scheme. Also, farmers prioritised reliable weather forecasts and storage facility as measures that may help in price realisation over the middlemen issue.
Govt. schemes helping farmers (% respondents)
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Measures that may help in right cropping decision/better price realisation (% respondents)
Uses of MSP
In a Niti Aayog study (FY08-FY11), even in States where awareness about the MSP and sale to procurement agencies were poor, an overwhelming share of farmers wanted the programme to continue. Apart from procurement, the MSP helped farmers escape exploitation even when they sold their produce to private traders.
Source: *2015 Shanta Kumar committee report; “Supply chain dynamics and food inflation in India”, RBI study; Evaluation report on efficacy of MSP on farmers, Niti Aayog, January 2016