Minimum support prices announcement - a fraud and deception

Government announced the minimum support prices (MSP) for 14 kharif crops on 4th July 2018. It claimed that it is fulfilling its election promise by offering 50% over the cost of production.

Farmers say no confidence in the government

Farmers say no confidence in the government

Within days of the announcement, hundreds of farmers' unions and organisations denounced this fraud by the government. The All India Kisan Sangharsh Coordination Committee (AIKSCC), which is an unbrella organisation of some 200 farmers organisation, has termed the announcements as a "historic betrayal". It has announced that it will organise hundreds of meetings all over the country in the next four months to expose the fraud. It took out a black-flag demonstration to Parliament Street on 20th July 2018 in which thousands of farmers from all parts of India participated. While the debate on the no-confidence motion was going on in the Parliament against the government, the farmers outside the parliament had already expressed their no-confidence in the government.

To press further for the demands of the farmers, two Bills have been drafted entitled, "Farmers’ freedom from indebtedness bill 2018" and the "Farmers’ right to guaranteed remunerative minimum support price for agricultural commodities bill". These have been introduced as private member's bills and the farmers are demanding a special session of Parliament to force a discussion on the two main demands of the farmers, namely, guaranteed procurement at remunerative prices and comprehensive farm loan waiver. To press for the passage of these Bills it is planning a big demonstration of farmers in Delhi on 31st October and 1st November.

Tables

Farmers want MSP to be fixed at 50% above the comprehensive cost of production (termed C2), whereas the government has been basing the MSP on the significantly smaller cost estimate of all paid out costs and cost of unpaid family labour (called A2+FL). The main difference between the two is that C2 includes the land rent, depreciation of machinery and cost of borrowings in addition to the A2+FL cost. Narendra Modi and other leaders of BJP had promised to implement the Swaminathan Committee report which had recommended procurement at 50% above the C2 cost. (See Table 1 to get an idea of the difference in these costs for some rabi crops.)

It is worth noting that most of the farmers are growing crops on rented land and have to take loans to purchase the inputs. Therefore, only the comprehensive cost (C2) is meaningful to them. As can be seen in Table 1, C2 cost is roughly 50% more than A2+FL cost. While the government propaganda is now claiming that it is fulfilling its election promise, Table 2 shows that the claim is false. Except for Bajra, the MSP declared in all other crops is only 7 to 19% over the projected C2.

The second apprehension that the farmers have is that the government has not worked out any plan for actual procurement of their produce. It may be noted that less than 30% wheat and less than 35% paddy was actually procured in the previous season. The procurement of dals was less than 20% and oilseeds less than even 7%. With so little actual procurement, farmers are forced to sell to private traders for prices much less than the MSPs. It is estimated that over 90 percent of the farmers do not get MSP for their crops.

Black flag rally of farmers

Black flag rally of farmers

Farmers at the Black Flag rally in New Delhi

The government procurement is extremely tardy. Often the grains brought to the mandis get spoiled before the government procurement is to take place due to exposure to moisture and rain. Farmers feel that the delay in procurement is deliberate and their consequent distress and damage to their produce goes to benefit private traders and liquor companies. When grains get wet, they cannot be stored and are sold to liquor producers at throw-away prices. Reports have come to light where plastic covers on sacks of grains are deliberately taken off during the rain to ensure that large quantity of cheap grains are available for liquor production at the cost of farmers' income. Such criminal acts go unpunished as the officials at the mandis are hands in glove with these lobbies.

The present government is claiming to be championing the cause of the farmers. However, inspite of alarming numbers of farmers suicides and massive demonstrations by farmers organisations, it did not bother to address their concerns in the first four years of its term.

Keeping the elections in mind, the government has also announced a compensation scheme called bhavantar in this year's Budget to compensate for farmers who do not get MSP for their produce. This scheme is supposed to have been implemented by the Madhya Pradesh government. Under this scheme, farmers were encouraged to sell their Rabi produce to private traders at whatever prevailing prices and then get compensated by the government. This encouraged the farmers to quickly sell their produce to private trader with the hope of government compensation for the deficit. However, the promised compensation never materialised for most farmers. It turns out that the MP government had simply not budgeted for this compensation amount and has rejected claims by most farmers on technical grounds!

Now the NITI Aayog is said to be working on three compensation schemes, which are likely to be announced before the general elections are announced. The first is a “market assurance scheme”, which involves procurement and remitting MSP into farmers’ bank accounts. Another is a price-deficiency payment scheme or PDPS, under which farmers are paid the difference between MSP and sale price at mandis without procurement (bhavantar falls in this category). The third scheme encourages the private sector with assorted incentives to procure crops at MSP. From their bitter experience, farmers do not have any expectations from such government schemes, which are grandly announced but result in no benefit for them.

The government and the capitalist media is now highlighting how the exchequer will lose 15,000 to 45,000 crores due to increased MSP. In March this year the NITI Aayog document titled Ensuring MSP benefits for farmers said, "The combined effect of the two budget announcements on farm level prices will be about 15%. Transmission of this increase to wholesale and retail levels will have very strong implications for inflation and consumers.” The purpose of such propaganda is to blame the farmers for inflation and the increased prices for workers and other working people. It is to prevent them from uniting in their common struggle in defence of their right to livelihood and a dignified living. This propaganda is hiding the fact that there is a huge difference between what the farmers get for their produce at the mandis and what the consumers have to pay due to profiteering by the big trading monopolies. It is perfectly possible for the Indian State to take over the wholesale trade in its hands. It must procure from the farmers at MSP determined as per the recommendations of the Swaminathan Committee. It must make timely payments to the farmers. It must organise storage and distribution efficiently and make it available to consumers at affordable prices.

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Aug 1-15 2018    Struggle for Rights    Rights     2018   

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