The Minuscule System Of Pricing

First, a farmer must sell the produce at a price wrongly discounted by unscientific calculation. Second, an unholy nexus of many players pushes the price down. Result: agriculture remains a loss-making venture and the debt trail leads to fatal consequences

- Jitendra

THE AGRICULTURE market cannot be explained by the simple principle of supply and demand. Rather, it is a devilish interplay of many vested interests that turn a blind eye to farmers’ concerns. There are more dubious players in the ubiquitous mandis or agriculture markets across India than in any other commodity markets. Both local political workers and power players in the Union Ministry of Agriculture and Farmers Welfare are part of this nexus. Starting from the stage where the government fixes the minimum support price (MSP) for agricultural produce to the mandis where it is sold, our farmers suffer.

Government declares MSP for 24 crops, but it primarily procures only wheat and paddy at that rate, leaving other crops to market volatilities. According to the National Sample Survey Office (NSSO) analysis, only six per cent of Indian farmers sell their crops at MSP and they mostly belong to major grain-producing states—Punjab and Haryana.

The ComMISsion for Agricultural Costs and Prices (cacp), under the Indian Council of Agricultural Research (ICAR), calculates MSP based on cost of production in 8,400 landholdings, which is 0.006 per cent of India’s total landholdings. Not all the factors used for MSP calculation are related to input costs. There are also subjective ones like the demand and supply trends in national and international markets. After Y K Alagh Committee’s recommendation in 2003, cacp included insurance premium paid by farmers and marketing and transportation costs. But calculation of production cost does not consider farmers’ profit. This is where the method of MSP calculation faces severe criticism.