MSP hike: Does it really solve problems faced by farmers?

The farmers have been unable to arrest the rising cost of production which depends on several factors such cost of fertilizers, irrigation costs, transportation costs, cost of other raw materials etc.

New Delhi, July 5: BJP-led Centre's decision to hike the minimum support price (MSP) for Kharif crops drew mixed reactions. With less than a year left for general elections, the move is bound to be looked at from a political point of view.

While the hike in MSP will undoubtedly provide some relief to the farmers, some say that too little is being done to address the actual problem. The farmers have been unable to arrest the rising cost of production which depends on several factors such cost of fertilizers, irrigation costs, transportation costs, cost of other raw materials etc.

Another reason which significantly affects farmers' income is low yield. Indian soils have been used for growing crops over thousands of years without caring much for replenishing. This has led to depletion and exhaustion of soils resulting in their low productivity. The average yields of almost all the crops are among the lowest in the world. One way to address this using right manures and fertilizers.

Yield also depends on quality of seeds. Seed is a critical and basic input for attaining higher crop yields and sustained growth in agricultural production. Unfortunately, good quality seeds are out of reach of the majority of farmers.

Irrigation is also a key factor that contributes to agricultural output. Although India is the second largest irrigated country of the world after China, only one-third of the cropped area is under irrigation.

So, the farmer problems cannot be solved unless the inherent problems in the agriculture system are addressed. What MSP hike seeks to address is the market volatility and fluctuating prices of agri products in the wholesale market. Sometimes the wholesale price of a certain crop falls so low that it fails to cover the cost of production incurred by the farmer. MSP ensures that such a sudden fall is taken care of by assuring a fixed minimum price in the market.

Now, if the move is looked at from a political point of view, it looks like the BJP has realised that they have to address the problems faced by the farmers as the party is aware that the crisis could affect its prospects in coming elections.

There were several protests by the farmers in different states in the last four years which the opposition would raise duting their campaign ahead of 2019 elections.

Punjab Chief Minister Amarinder Singh has already termed the Centre's decision to hike the minimum support price for paddy by Rs 200 per quintal, a "cosmetic" measure, which, he alleged, did not address the core concerns of the farmers. Singh said the increase did not meet the state government's demand for 50 per cent hike over and above C2 (a comprehensive cost, accounting for the rentals and interest forgone on owned land and fixed capital assets over A2 + FL (which covers the actual paid out costs plus an imputed value of unpaid family labour).

Commission for Agricultural Costs and Prices (CACP) has three different definitions of productions costs - A2 (actual paid out cost), A2+FL (actual paid out cost plus imputed value of family labour) and C2 (comprehensive cost including imputed rent and interest on owned land and capital).

BJP chief Amit Shah on Wednesday hailed the Centre's decision to increase the minimum support price of kharif crop as "historical", stating that the move would benefit the farming community in a major way.