“The Centre can increase its focus on strengthening the institutions of farmers and not the market institutions per se”

Post the repeal of the farm laws last year, the centre was tasked with forming of a committee to give suggestions on making minimum support price (MSP) more effective, giving more autonomy to the Commission for Agricultural Costs and Prices (CACP) and pursue measures to strengthen the agricultural marketing system. So far, the committee has conducted two meetings and created subgroups to examine the important issues hindering the business of agriculture. In an interaction with AgroSpectrum India, Vijay Sardana, a renowned techno-legal advisor on agribusinesses in India, explains the key dimensions of agriculture along with the action points that such committees should undertake. 

- Manishika Miglani

Can you brief us about how MSP works and the role played by the government for its effective functioning?

There are a lot of issues surrounding agriculture, one of them being the remunerative prices given to farmers. Here we have to consider the fact that price is a factor of market forces and the government itself cannot play around with the same beyond a certain bandwidth. One classical yet reverse example to explain the case in point is the recent losses being incurred by petroleum companies in the event of the government trying to control it. The Public Sector Units (PSUs), however, are not impacted by such a move as the losses are later absorbed by the government through sacrificed losses or recapitalisation. But the private players have to bear the brunt in such a case, thus being a testament to this theory that remains true in the business of agriculture as well.

What are the possible ways of fixing the demand-supply imbalance to improve the business aspect of agriculture? Can you also shed light on the implications in the event of not doing so?