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Swaminathan Says MSP Is Better Than Loan Waiver


Agricultural scientist Monkombu Sambasivan Swaminathan, known as the father of India’s Green Revolution, has said that the Union government should set minimum support prices (MSP) for agricultural products using a broader and more comprehensive measure of costs. than the one currently used.

Swaminathan first recommended that MSPs, which act as a floor price to avoid emergency sales, should be “at least 50% more than the weighted average cost of production” in the fifth report of the National Farmers Commission established under his presidency. .

“When we recommend 50% on costs, we mean full costs called C2, which includes all assumed costs. In fact, that is also what farmers demand, ”Swaminathan told HT.

However, he did not comment on the ongoing agricultural agitation against three controversial new laws that aim to liberalize the agricultural economy.

The protesting farmers, in addition to the repeal of the laws, have also demanded a law that guarantees the PMS calculated with the C2 criterion. Farmers will hold the next round of negotiations with the Center on Friday.

Formula C2 for calculating the cost of cultivation includes the imputed cost of capital and land rent to give farmers a 50% return, rather than a more restricted measure that takes into account all costs paid in which incurs a farmer and the value of family labor (A2 + FL).

It matters how the cost of production is calculated. Average MSPs set for winter-sown crops show that if C2 costs are used as a benchmark, yields for most crops are less than 50%. However, when A2 + FL is used, yields are greater than 50% in crops such as rice and wheat.

The Union government says it has implemented the Swaminathan commission’s recommendation by setting MSPs to offer a 50% return on cultivation costs, a decision first announced in the 2018-19 budget.

However, the government uses the narrower measure A2 + FL to calculate MSPs.

“Our demand is that MSPs are based on C2 costs and the government should force all traders to pay MSP fees to farmers,” said Darshan Pal, a senior agricultural union leader.

Emphasizing that MSPs should include the broadest measure of a farmer’s costs, including the rental value of the land, Swaminathan said: “Many states advertise loan exemptions. Instead of spending so much on loan exemptions, the government should use the money to give a 50% profit based on C2 costs. ”

However, it has been argued that the Swaminathan report clearly states that “the MSP should be at least 50% more than the weighted average cost of production” without specifying what cost of production will be used.

Swaminathan’s report also states that the net income of farmers should be comparable to that of public officials.

The Swaminathan Commission, established in November 2004, initially submitted four reports in December 2004, August 2005, December 2005, and April 2006, followed by a fifth and final report in October 2006.

“The 50% profit over cost recommendation should be read in conjunction with other sections of Swaminathan’s report, including Exhibit 2.2, which clearly outlines how C2 was not being covered by MSP in most states,” said Arun Kavi Farmers’ Rights Forum, a group of advocates.

On September 28, 2017, Swaminathan tweeted that MSPs should be calculated to cover C2 + 50%, in addition to being accompanied by procurement, warehousing and distribution.

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