Trust Issue with MSP


It would perhaps not be incorrect to say that the overview of the recently passed farm bills is to say that the farmers, rotting in the clutches of the APMCs, will now finally be liberated by the corporates. Seemingly, the farmers in this country will now have wings to fly, out in an open market, exercising choices. But what have farmers all over the country been demanding for years? A price stability. And what does these acts offer to them instead? A fluctuating volatility. It intends to say that the free market is a liberation and that State support is an enslavement.

Balwant Singh, a farmer from Punjab owning around 2 acres of land, protesting at the Tikri border since the past few weeks, chose to explain to me about the issue with MSP in these bills. “MSP is the minimum selling price, that the government guarantees for a kisaan that he should compulsorily get for his crops. Why is there no mention of MSP in the acts? The government has brought a law that totally wishes to exclude it”.

Now this MSP is not on all crops. Currently it is announced on 23 crops. But he says, “Practically wheat and rice are the only two crops that surely get it”. Around 6 per cent farmers in the country get to actually avail and benefit from it as per the Shanta Commission Report. That is due to several discrepancies in the system. He further explains by giving an example that, “When you go to a shop and buy a product, you have to buy it at the rate of MRP. But farmers, especially the small ones have no idea of the rates their crops should get. Why should there be no fixed price for our crops below which rates cannot drop?”


Post-independence, there existed a monopoly of the sahukars and the traders who would corner farm produce as it hit the market and hoard them up in bulk only to sell them later at a higher price. It is under these circumstances that the APMC Act had come about. Now again, the recent acts take you back in history, leaving ways for the traders to dictate the market which they could not due to MSP, laws against stockpiling and government procurement. Let us understand the price assurance in another way. If I grow potatoes in my land, for instance, it would depend on various natural factors since agriculture is an occupation that is totally at the hands of the nature. That year, if the crop grows well, it would grow well for all the farmers around. So then there is a surplus in the market and the price drops. Nobody makes money. Similarly, if those potatoes are grown in drought season, no one grows good crops and hence no one makes money either.

Thus, the concept of a stability in price as a safeguard. With the passage of times though, the APMCs have become extremely flawed. For example, there have been ways of undermining the MSP, as Ravi, a 35 years old farmer from Punjab owning 2 acres of land joined in the conversation and added that, “Government does not always procure enough. Sometimes it would start the process few days later or would close them earlier.  And crops are perishable goods, the farmer has to then sell outside because they have to survive”. But even with the flaws, which are extremely important to be fixed, it still provides hundreds of farmers with a good price.  With the new farm bills this assurance ceases to exist completely, leaving chaos. Think of the government schools versus the private ones. The former, with all its deteriorations, is still the only way of education for thousands of students. Is a logical solution going to be to do away with it or fixing it?


The Farm Bills technically have nothing to do with MSP, since there is no existing legislative framework for the same. Then why is the question of MSP being brought up so much with respect to these legislations? It is because the farmers worry that the changes being brought through these Farm Bills will facilitate the end of the government mandis, making it easy for corporates to exploit the system. Kuljeet Singh Bambiha, a middle-aged farmer owning 5 acres of land, very excitedly offers to explain the whole situation. He says, “When these private mandis will come into the picture, for the first few years they will give us great prices for crops. After which they will have monopolised the market, and start exploiting us. There’s no tax on them either. And with no guarantee of a support price, we will be at their mercy.” And it is true indeed, like we have seen in multiple sectors (example- health, education) that the private sector is not some saint who are going to come as a messiah to our farmers instead of making profits.

The government has given written assurances to the farmers that MSP would still be there. To understand completely the reasons for fearing the abolishing of MSP, we need to understand where the government stands with regard to this for the last five years. In 2014, before being elected, the Hon’ble Prime Minister said that he we will implement the main point of the Swaminathan Commission within the first 12 months (that is, cost of production + 50%). In 2015,however, the BJP filed an affidavit in the Hon’ble Supreme Court explaining how it is not possible to implement the MSP and that it would distort market prices . In 2017 the Hon’ble Agricultural Minister, Radha Mohan Singh said that they will follow the Madhya Pradesh model rather than sticking to MSP. In 2018, Mr. Arun Jaitley, in his budget speech on Finance Bill mentioned that the BJP had already implemented the Swaminathan Commission recommendation on MSP in the rabi crops and will next follow it in kharif crops. In 2020, Hon’ble Agricultural Minister, Narendra Singh Tomar said that the BJP is the only party that respected the Swaminathan Commission.

What is the Swaminathan Commission and how much is it really followed? The Swaminathan Commission was tasked with finding solutions to the problems faced by farmers. The Swaminathan Commission identified certain causes for farm distress like unfinished agenda in land reform, quantity and quality of water, technology fatigue access and adequacy and timeliness of institutional credit. One of the recommendations was give farmers a minimum support price at 50 per cent profit above the cost of production classified as C2 by the Commission for Agricultural Costs and Prices (CACP).  The CACP defines production costs of crops under three categories where C2 is the most comprehensive definition of production cost of crops as it also accounts for the rentals or interest loans, owned land and fixed capital assets over and above A2+FL. In reality, to fix the MSP, 50 per cent is added to the value of only A2 plus FL. And thus, there is a large difference between the MSP sought by the farmers and the MSP given by the government. Hence, the complete lack of trust with just mere assurances by the government which are being construed as repetition of false promises.

Therefore, when Ravi is asked about his demand to the government, he along with the farmers around agree with each other and say, “We want the Swaminathan Committee to be followed in toto and make it a legal right. Today we still have been benefitting from the system but what about our other kisaan brothers who aren’t?”

It is as if when the government could not implement MSP rightfully in years and also failed at converting it into a legal right or perhaps did not intend to, it framed a legal system that would consequentially do away with it entirely.

Senjuti Chakrabarti is an advocate and a freelance journalist



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