Make MSP legally binding

For over two weeks last month, farmers in Chhattisgarh's Durg district dumped tomatoes on to the streets. In just one village, Parsuli, an estimated 100 quintals was either fed to cattle or left to rot in the crop fields. After a relatively better marketing season that lasted till the first week of January, retail prices plunged.

Far away, farmers in Erode district in Tamil Nadu were a worried lot after the retail price of cabbage crashed. From Rs 12/kg last year, it dropped to as low as Re 1 per kg. In Chhattisgarh, too, tomato prices crashed, leaving farmers in the lurch.

Not fetching more than Rs 2 per kg, farmers simply abandoned the tomato harvest. The deplorable price they get in the market is not even enough to meet the plucking and harvesting cost.

This is primarily because of higher production. Whether it is cabbage, tomato, potato, onions or any other crop, the higher the production, lower is the price. A higher production enables middlemen to form cartels and manipulate prices, often to the extent of exploitation.

T Rajaganesh, a farmer in Erode district, asks: "Farmers spend at least Rs 45,000 per acre a month to cultivate cabbage. Add to it the cost of labour, maintenance and fertiliser, and the cost shoots up to more than Rs 50,000 a month.

Since it takes almost three months to yield, we have to spend at least Rs 1.5 lakh per acre before harvesting. How can we realise a profit with a farmgate price of Rs 1 per kg?"

In the case of tomato too, average cost of production is about Rs 90,000-1 lakh per acre for small farmers. For the big farms, the production cost is a little higher, at Rs 1.25 lakh per acre.

Till the first week of January, when I travelled to meet tomato farmers in Durg, the prices were much better - about Rs 1,000 per crate of 25 kg. But, with the advent of tomato crop from Karnataka, the supplies swelled, and prices slumped.

Now, let's take the case of chana. According to news reports, chana prices are ruling at about Rs 3,600 per quintal, against the Minimum Support Price (MSP) of Rs 4,400 per quintal, a drop of 20% in the retail price.

With production expected to increase to 10 million tonnes this year (from 9.33 million tonnes last year), prices are expected to dip with arrivals picking up. Even wheat price has remained below MSP by 6-8% in Gujarat and Madhya Pradesh, where early crop harvest hit the mandis.

In February last week, market price for tur dal was ruling at Rs 4,500 per quintal, against the procurement price of Rs 5,500 at Tandur market in Telangana.

Meanwhile, reports of tomato being dumped on the streets in Chhattisgarh poured in again in early March. This is the third year in a row when tomato prices have crashed to Re 1 per kg. In fact, this is the third year in a row when prices of almost all agricultural commodities have crashed across the country.

Karnataka model

After two years of drought in 2014 and 2015, production picked up after a favourable monsoon in 2016 and 2017. While the increase in production has brought cheers to the government, the drop in prices has added to the misery of farmers.

It is here that I see the relevance of a very timely suggestion made by Dr TN Prakash, chairman of the Karnataka Agricultural Prices Commission. He has called for making the Minimum Support Price of crops to be legally binding. He said: "Consumers have legal protection if produce is sold above MRP and can approach the courts. But, even after 70 years of Independence, farmers don't have similar protection."

For the third year in a row, prices of almost all commodities are at 20-45% lower than MSP in various parts of the country. At times of glut, traders ruthlessly exploit farmers. Even the introduction of the Unified Market Platform in Karnataka, which led to the expansion of 585 eNAM (National Agricultural Market) throughout the country, farmers have not gained.

The concept of model price, which is based on the average of the day's trading, is in reality a distress price and needs to be dispensed with. eNAM in reality is a nationwide platform being created to make it profitable for spot trading.

In addition to 23 crops for which MSP is announced every year, state governments must work out MSP for highly perishable commodities like tomato, potato, onion and other vegetables.

Many states already have a Farmers' Commission, which has more or less become retiring rooms for political appointees.

The immediate need is to convert them into State Agricultural Prices Commission, with the mandate to provide higher income to farmers, similar to that in Karnataka. If Karnataka can ensure procurement of 14 crops at prices much higher than the MSP announced by the Centre, I see no reason why other states cannot.