Right to Sell at MSP, CACP suggests New Law for Farmers

The Government has introduced recently new Minimum Support Price for the Farmers selected Produce. Farm advisory body CACP has suggested that the government should consider bringing a separate law entitling farmers to sell their produce at the minimum support price (MSP). The CACP, a statutory body under the Union Agriculture Ministry, recommends MSP for notified Kharif and Rabi crops.

"to instil confidence among farmers for procurement of their produce, a legislation conferring on farmers The Right to Sell at MSP' may be brought out," said the Commission for Agricultural Costs and Prices (CACP) in its latest report on Kharif crops 2018-19.

The Commission for Agricultural Costs & Prices (CACP) is an attached office of the Ministry of Agriculture and Farmers Welfare, Government of India. It came into existence in January 1965. Currently, the Commission comprises a Chairman, Member Secretary, one Member (Official) and two Members (Non-Official). The non-official members are representatives of the farming community and usually have an active association with the farming community.

It is mandated to recommend minimum support prices (MSPs) to incentivize the cultivators to adopt modern technology, and raise productivity and overall grain production in line with the emerging demand patterns in the country. Assurance of a remunerative and stable price environment is considered very important for increasing agricultural production and productivity since the market place for agricultural produce tends to be inherently unstable, which often inflict undue losses on the growers, even when they adopt the best available technology package and produce efficiently. Towards this end, MSP for major agricultural products are fixed by the government, each year, after taking into account the recommendations of the Commission.

As of now, CACP recommends MSPs of 23 commodities, which comprise 7 cereals (paddy, wheat, maize, sorghum, pearl millet, barley and ragi), 5 pulses (gram, tur, moong, urad, lentil), 7 oilseeds (groundnut, rapeseed-mustard, soyabean, seasmum, sunflower, safflower, nigerseed), and 4 commercial crops (copra, sugarcane, cotton and raw jute).

While recommending price policy of various commodities under its mandate, the Commission keeps in mind the various Terms of Reference (ToR) given to CACP in 2009. Accordingly, it analyzes

1) demand and supply;

2) cost of production;

3) price trends in the market, both domestic and international;

4) inter-crop price parity;

5) terms of trade between agriculture and non-agriculture; and

6) likely implications of MSP on consumers of that product.

It may be noted that cost of production is an important factor that goes as an input in determination of MSP, but it is certainly not the only factor that determines MSP.

CACP submits its recommendations to the government in the form of Price Policy Reports every year, separately for five groups of commodities namely Kharif crops, Rabi crops, Sugarcane, Raw Jute and Copra. Before preparing aforesaid five pricing policy reports, the Commission draws a comprehensive questionnaire, and sends it to all the state governments and concerned National organizations and Ministries to seek their views. Subsequently, separate meetings are also held with farmers from different states, state governments, National organizations like FCI, NAFED, Cotton Corporation of India (CCI), Jute Corporation of India (JCI), trader's organizations, processing organizations, and key central Ministries.

The Commission also makes visits to states for on-the-spot assessment of the various constraints that farmers face in marketing their produce, or even raising the productivity levels of their crops. Based on all these inputs, the Commission then finalizes its recommendations/reports, which are then submitted to the government. The government, in turn, circulates the CACP reports to state governments and concerned central Ministries for their comments. After receiving the feed-back from them, the Cabinet Committee on Economic Affairs (CCEA) of the Union government takes a final decision on the level of MSPs and other recommendations made by CACP. Once this decision is taken, CACP puts all its reports on the web site for various stakeholders to see the rationale behind CACP's price and non-price recommendations.

While recommending MSP for kharif crops for 2018-19, the body also suggested opening of procurement centres in remote areas at gram panchayat level.

Yesterday, the Union Cabinet approved substantial increase in the MSP of all 14 notified Kharif crops, including paddy. The hike was largely in line with the suggestion of the CACP.

The government procures only wheat and rice directly from farmers at the MSP for distribution through ration shops. It, however, procures others crops if their open market prices fall below the MSP.

The CACP recommendation to come out with a law on 'right to sell at MSP' is in line the demand made by several other farmers organizations.

There is already several laws on Right to Food, Right to Education and Right to Information among others.