Farmers have been protesting the MSP issue since the 2020/21 agitation (File).

New Delhi:

The deadlock between the government and protesting farmers rolled into a second week Monday, with no definite breakthrough after four rounds of talks but signs of an accord on the horizon.

At a meeting late Sunday the Modi government – facing a second round of farmers’ protests, this time just weeks before a general election – relented on the subject of MSP, or minimum support price, proposing a five-year contract for the no-limit purchase of pulses, maize, and cotton at fair prices. The farmers – for whom MSP has been a red-flag issue since 2020/21 – asked, and were given, 48 hours to confer, and have placed the ‘Delhi Chalo 2.0’ march on hold.

A legal assurance for MSP is seen as No.1 on the farmers’ wish list.

The two sides met in Chandigarh, with the government represented by three union ministers, including junior Agriculture Minister Arjun Munda and Commerce Minister Piyush Goyal.

Responding to the proposal, farmer leader Sarwan Singh Pandher said, “We will discuss (this) in our forums (on Monday and Tuesday), take experts’ opinion, and accordingly take a decision.”

Farmers-Government Agree On MSP?

In brief, the following points emerged from the Chandigarh meeting.

1. Union cooperative societies like NCCF, or National Cooperative Consumers Federation, and NAFED, or National Agricultural Cooperative Marketing Federation of India – will sign a five-year contract to buy dal or maize
2. Under this contract the above crops will be bought at MSPs.
3. There will be no limit on purchase quantities and a website will be made.

Mr Goyal later said the five-year offer is part of a long-term strategy to increase maize production “as a major feed stock for grain-based ethanol supply under the ethanol blending programme…”

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It will save Punjab’s farming (sector), improve the (quality of the) groundwater table, and save the land – which is already under stress – from getting barren, the Union Minister explained.

The government – whose move to encourage maize and dal production is part of its “crop diversification” – set the MSP for maize at Rs 2,090 per quintal last year, up from Rs 1,760 in 2019.

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An estimated 346.13 lakh tons of maize was grown in 2022/23, which was a record high.

Current MSP Scheme

At present MSP is offered on 22 crops apart from staples like paddy, wheat, pulses, and maize. These include ragi, groundnut, soybean, sunflower seeds, barley, rapeseed, and mustard.

The 2023 prices were announced in June, when kharif crop MSPs were increased, the government said, “to ensure remunerative prices for their produce and to encourage crop diversification”.

This was fixed at a level of at least 1.5 times the All-India weighted average cost of production.

Farmers’ MSP Demand

In addition to a legal backing for MSPs, the farmers want the Swaminathan Commission’s recommendations to be implemented, as well as pension for farmers and farm labourers.

The Swaminathan Commission’s recommendations on MSP are worth mentioning, since it suggested the floor price be set at least 50 per cent above the weighted average cost of production.

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This is known as the C2+50 formula, which factors cost of capital and land rent in setting MSPs.

The umbrella farmer body behind this round of protests, the Samyukt Kisan Morcha, has indicated it is unwilling to accept anything less than that formula.

What Is MSP?

MSP is a form of market intervention and refers to a set fixed by the government to protect farmers from a steep fall in crop prices; for example, during a bumper crop when prices plummet.

Essentially, every year the government purchases a quantity of certain crops, the list and prices of which are announced before sowing. The purpose is not only to allow farmers a minimum return on (part of) their investment but also procure crops for the government’s public distribution system.

The MSP is the floor price, i.e., it is the minimum at which a crop can be bought in the market.

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MSPs, however, have no legal backing, meaning the government is not obliged to buy, for example, 10 per cent of a farmer’s paddy crop at the floor price. And it is this that the farmers want changed.

The row over MSP made headlines four years ago after the second of the Modi government’s three “black” laws, which were scrapped after the farmers’ 2020/21 protest. This law – the Farmers (Empowerment and Protection) Agreement of Price Assurance and Farm Services Act – said crop prices would be determined by market forces – i.e., farmers would get more for in-demand crops.

The farmers, however, felt this would abolish, by default, the MSP feature.

The government sought, unsuccessfully, to allay these fears.

Farmers’ Other Demands

Meanwhile the farmers also want debt waivers, no hike in electricity tariffs, and withdrawal of police cases filed in the 2020/21 protests, when they had violent clashes with security personnel.

Finally, they also want justice for farmers killed in Uttar Pradesh’s Lakhimpur Kheri, reinstatement of the Land Acquisition Act, and compensation to the families of those who died four years ago.

Where Are The Farmers Now?

Protesting farmers are now camped around 200 km from Delhi, with multiple fortifications and barriers – from concrete blocks and barbed wire to nail strips and metal barricades – in their way.

They are, for now, being held at the Shambhu border crossing between Punjab and Haryana.

The protest began last week; a small crowd at Shambhu were tear gassed by Haryana police officials, who fired over two dozen shells in a warning salvo. Since then, though, the situation has been calm.

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