Amravati farmers say new MSP for Kharif crops is not enough

The Narendra Modi government came to power on the promise of doubling farmer income and said that one of its key initiatives to this end has been hiking the minimum support price (MSP) for 23 crops every year.

The minimum support price, as the name suggests, is the least amount farmers can expect when they sell these crops to the government.

This year, the government raised the MSP for all 14 crops for the Kharif season. The MSP was raised by 4-9 percent. The government claims that the step was taken to boost farmers’ income and encourage crop diversification. Paddy, tur, moong, soyabean and cotton were among these 14 crops.

Manish Bansal, a 37-year-old farmer in Maharashtra's Amravati, has sown soyabean on his 4-acre ancestral farm. Going by the latest MSP, he expects Rs 4,300 per quintal of soyabean which is higher than the Rs 3,900 per quintal last year. But he is not impressed because the new price does not even cover his cost of production.

"The MSP is less as compared to inflation. Labour cost, petrol, transport, fertilisers, everything is more expensive. Cost of production is Rs 5,000 per quintal but government is giving Rs 4,300 per quintal," Bansal said.

It's not just small farmers who are facing the pinch. Even large farmers who have the advantage of scale and access to better technology are looking at losses despite the MSP hike.

Dr Sachin Charjan, a soyabean farmer said, "The MSP fixed by the government this year actually matches what our cost of production was three years ago. Now the cost of soya seeds, fertilisers, labourers, everything is more expensive."

Farmers said the MSP escalation does not take ground realities into account or factor in input shocks like the rise in crude oil prices or the war in Ukraine, which has disrupted supplies.

Till last year, a 30-kilogramme bag of soyabean seeds used to cost Rs 2,200. Now it costs between Rs 4,000 and Rs 4,500. Fertiliser costs have also risen sharply. Now a 50-kilogramme bag of DAP or Diammonium phosphate fertiliser which used to cost Rs 1,180 last year now costs Rs 1,380.

Mixed-fertiliser now costs Rs 1,750 for 50 kilos, against Rs 1,150 last year. Prices of the 50-kilo bag of potash has more than tripled, from Rs 550 to Rs 1,750.

Labour costs have also risen from between Rs 125 and Rs 150 per day per labourer to between Rs 200 and Rs 300 per day per person. This grouse over increased costs and insufficient MSP is not specific to soyabean farmers.

"The MSP doesn't even cover the cost of production. And this true not only for soyabean, but for all the 14 Kharif crops," said Dr Ashok Dhawale of All India Kisan Sabha.

The complaint of insufficient MSP is not a new one. In 2006, the MS Swaminathan Committee recommended that MSP be calculated using the more comprehensive formula of the overall cost of cultivation plus 50 percent -- where the cost of cultivation includes peripheral costs like rent for farmland and any interest paid by the farmer.

However, the government uses a more basic formula that takes into account only direct costs like prices of seeds, fertilisers, fuel, irrigation and unpaid labour.

In March 2020, the government said it considers calculations using both formulas to arrive at the final MSP and was confident that its MSPs would boost farmer incomes. Farmers, however, said that in reality, this won't happen.