CHANDIGARH: Punjab-based economists say that central government’s hike in the minimum support price (MSP) of crops for the Kharif season marketing season 2021-22 is meagre and going by the MS Swaminathan commission formula, there should have been at least 34% more MSP on paddy and 30% more on maize.
These economists are also of the view that despite tall claims, the central government has failed to implement the MS Swaminathan commission report but at the same time the formula to calculate the MSP needs a serious review.
Ranjit Singh Ghuman, professor of economics in the Centre for Research in Rural and Industrial Development (CRRID) at Chandigarh, says, “As per my calculation, the MSP should at least be 34% more on paddy going by the MS Swaminathan formula.
Similarly, in the case of maize, the MSP should be at least 30% higher than what the government has announced.” Whereas the Centre has increased the MSP of paddy by just 3.85% and that of the maize by 1.08%, he added.
There are nearly 10.8 lakh farmers in Punjab.
Professor Ghuman calculated the total quantity of paddy and wheat procured by the government agencies in Punjab in 2019-20 by applying the actual government MSP and also as per the Swaminathan MSP.
“I found that farmers in Punjab got Rs 14,296 crore less for wheat and paddy in 2019-20 as per the government MSP as compared to the Swaminathan MSP formula,” he said while refuting tall claims of the government of implementing the Swaminathan formula.
The hike in MSP of paddy is not even peanuts looking into the increase in the cost of production as the labour cost has increased during the Covid pandemic, says Satish Verma, RBI chair professor (economics) at CRRID.
“This will push agriculture towards non-viability,” he added.
Prof Verma said that the cost of diesel is witnessing continuous increase and even if the diesel component may be 1/20th of the cost of production, the so-called increased MSP is not going to even recover that cost.
In terms of the increased labour cost, since big farmers are shifting to mechanisation, the small and marginal farmers would be at the bigger loss, he added.
How can maize replace paddy? Maize which got a 5.1% increase in its MSP last year has just got a 1.08% hike this year.
So, it is not favouring diversification and it shows that the government is not serious in promoting maize, says Prof Ghuman.
This is also the result of our research mainly biased towards wheat and paddy to focus on the nation’s food security needs, he added.
Similarly, Prof Verma said, “We project maize as an alternative to paddy in Punjab.
Leave aside the increase in its MSP this year, when its MSP was Rs 1,850 per quintal last year, it was sold anywhere between Rs 700 and Rs 1,200 per quintal in Punjab.” Prof Ghuman says that from 2010 onwards, the central government has been pushing for reducing the areas under water-guzzling paddy but there are no efforts on the ground, which shows that these are mere sermons.
“The Punjab government is time and again writing to the Centre to permit it to prepare Ethanol from maize but the required permission is still awaited,” he added.
Need to change MSP calculation formula The economists also feel that the formula to calculate the MSP needs a serious review as per the Ramesh Chand committee report submitted to the central government in 2015 which said while calculating the cost of crop rearing, at least head of the family should be valued at skilled worker wage rate and management cost should also be there.
“But this issue has not been addressed by the central government till date,” says Prof Ghuman.
This ‘so-called’ Swaminathan MSP of A2 + FL x 50% is much below the comprehensive cost of C2+50% being demanded by the farmers, he added.
There are so many factors that play their role since the sowing of the crop till its harvest such as the hike in the cost of diesel, fertilisers, pesticides, machinery and labour besides many unforeseen circumstances like the weather conditions which increase the cost of production.
Focus on pulses, oilseeds In last year’s Kharif policy, it has been specifically written that Punjab should shift to the production of pulses and oilseeds.
“We spent a lot in terms of foreign exchange for the import of pulses and oilseeds.
But to save that, the government should incentivise the production of pulses and oilseed through price policy intervention, research and development,” said Prof Ghuman.