The current impasse between the Jagjit Singh Dallewal-led farmers’ movement in Punjab for a ‘legal MSP guarantee’ has not made the kind of headline news that its predecessor—the 2020-21 farm agitation—managed three years ago.
Back then, the mobilisation was on a much higher scale, with almost all the non-BJP political parties offering their support. The geographic reach of that movement extended well beyond Punjab into Haryana, Uttar Pradesh, and Madhya Pradesh, and stirrings were felt as far as Vidarbha.
This column looks into the history of MSP, why it is important, and why it may not be as salient today as it once was.
The ‘ship-to-mouth’ days
Sixty years ago, in 1965, the foundations of the Green Revolution, the Minimum Support Price (MSP) regime, and procurement operations were laid by the foursome of Lal Bahadur Shastri as the pragmatic Prime Minister, C Subramaniam as the no-nonsense agriculture and food minister, the newly appointed ICAR chairman MS Swaminathan, and B Sivaraman, the Union agriculture secretary specially inducted for this task.
Shastri and Subramaniam gave the necessary political and budgetary support to push these reforms through in the teeth of opposition from then finance minister TT Krishnamachari and financial conservatives like Morarji Desai, who feared it would lead to runaway inflation. Swaminathan built the technical foundation of the Green Revolution by revamping the agriculture research and extension system. And last but not least, Sivaraman steered the legislation that established the Food Corporation of India (FCI) and the Agricultural Prices Commission (APC, now CACP)—the administrative apparatus necessary to formulate and implement the MSP.
Millennials may find it difficult to believe, but during the mid-1960s, our food situation was often described as a ‘ship-to-mouth existence’. Our public distribution system (PDS) was critically dependent on foodgrain imports from the United States under Public Law 480 (PL 480), a foreign policy initiative of U.S. President John F. Kennedy, who famously said, “Food is strength, and food is peace, and food is freedom, and food is a helping hand to people around the world whose goodwill and friendship we want.”
This was also the time when Prime Minister Shastri gave a clarion call to every Indian to skip one meal a week from November 1965 to ease the food situation Of India’s requirement of 95 million tonnes of foodgrains for a population of 480 million, our import dependency was as high as 12 million tonnes.
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Scarcity to surplus—and scepticism
From then to now, we have seen the transformation of India from a food-deficit nation to one with abundant surpluses. Last year’s cereal production reached over 330 million tonnes. More importantly, our diets are far more diverse, with high-value agriculture—milk, poultry, fish, and meats—becoming increasingly prominent.
However, for the last sixty years, the Commission for Agricultural Costs and Prices (CACP) has continued announcing MSP for its mandated crops.
Starting with wheat and paddy in 1965, MSP now covers 23 crops. These include cereals like jowar, barley, bajra, ragi, and maize; pulses such as arhar, gram, moong, and lentils; and oilseeds like groundnut, mustard, and soybean. Other agricultural commodities like tobacco, raw cotton, raw jute, and copra, are also covered, besides the Fair and Remunerative Price (FRP) for sugarcane. The FCI deals primarily with cereal procurement, while Nafed takes care of pulses and oilseeds.
There has not been a single year when MSP was not announced, or procurement not undertaken. Yet, every year, there is an expectation mismatch: farmers always demand higher prices than those announced by the CACP.
But does MSP address the real challenges facing farmers?
Limits of MSP
The CACP considers a host of factors while announcing MSP. These include the demand-supply situation, trends in domestic and international prices, inter-crop price parity, terms of trade between agricultural and non-agricultural sectors, and the likely impact of MSP on consumers and the overall economy. Rational utilisation of scarce natural resources like land and water are also taken into account. However, the 1990s saw a decline in the terms of trade for agriculture compared to other sectors of the economy, leaving farmers’ livelihoods lagging behind.
To address farm unrest and suicides, the UPA government appointed the National Commission on Farmers under Dr MS Swaminathan in 2004. One of the recommendations of its 2006 report was that MSP should be at least 50 per cent higher than the weighted average cost of production. While this recommendation was not incorporated into the UPA’s National Policy for Farmers, the NDA government under Prime Minister Modi adopted it. The government assured that with effect from 2018-19, the MSP for Kharif, Rabi, and commercial crops would offer a return of at least 50 per cent over production costs.
This Swaminathan Commission recommendation on MSP has been in effect for the last six years. Indeed, MSP was not even a central issue in the yearlong farmers’ protest, which began on 26 November 2020 and ended on 19 November 2021 (Guru Nanak Dev Jayanti). That protest focused instead on opposing the contentious farm laws on contract farming, land leasing, and APMC markets. The PM’s announcement of the laws’ withdrawal was supposed to be followed by a series of dialogues between the government and farmers, but this has not happened. Both sides—the government and the farmers— now accuse each other of reneging on their promises.
In 2021, the Supreme Court set up a committee to break the deadlock, but the farmers refused to engage with the panel, citing the members’ support of the farm laws. Subsequently, the government established another committee under then Union Agriculture Secretary Sanjay Agarwal, but the farmers insisted on the inclusion of the Union Agriculture Minister in the discussions.
In a column in the Indian Express, farm leader Ajay Vir Jakhar wrote that the one element that is missing is that of trust – with a capital T. The farmers refuse to accept that the government has indeed tried to double their incomes, with many viewing the farm laws as a step to fast-track institutional and corporate investments in agriculture. Further, even if the demand for a ‘legal MSP’ is accepted, it wouldn’t be enough to double farmers’ incomes, he has argued.
For the growth potential in agriculture does not lie in wheat, paddy, or copra, but in milk, poultry, fisheries, and high-value crops like citrus, bananas, and strawberries—where price discovery is best left to the markets.
In fact, as pointed out by Jakhar, interventions by the Union and state government for urban consumers of tomatoes , onions, and potatoes actually distorts agricultural markets—and the primary producer loses much more than what the urban consumer gains.
A diluted agitation
What is the current farm agitation about, and how is it different in scale and scope from the farmers’ movement of 2020-21, which saw the Prime Minister to back down on the three contentious farm laws?
This time, the government is not biting the bullet. The demands from the farmers’ side read like an amalgamation of multiple charters—from those of the Swadeshi Jagran Manch to activists for MGNREGA and tribal rights. Many of these issues fall under the purview of the state government and ministries other than agriculture.
The demands include debt waivers for farmers, quadrupled compensation for land acquisition, scrapping the Electricity Amendment Bill of 2020, and withdrawal from the WTO. For the landless, there is a push for a revamp of MGNREGA, including doubling employment days from 100 to 200 and a national minimum wage of Rs 700 per day. Other demands are criminal action in the Lakhimpur Kheri killings, penalties for the manufacture and sale of fake farm inputs such as seeds and fertilisers, and a commodity board for chillies and turmeric.
Last time, the traders who were impacted by the APMC Act were with the farmers. This time, they are not—and this too has made a major difference. Moreover, the fissures in the farmers’ movement, the refusal to engage with any political party, and the non-involvement of leaders from Haryana, UP, MP, and Maharashtra have made the current Dallewal-led agitation a pale shadow of the 2020-21 movement, when the lineup of 950 trolleys on the Shambhu border had seen the support of students, thespians, poets, civil society activists, and intermediaries affected by the APMC Act alike.
This time, even in the Doaba and Majha regions of Punjab, where the economy is driven by manufacturing, services, and pilgrimage tourism, disruptions of the kind enforced during the Punjab Bandh of 30 December do not find resonance.
Take the case of Amritsar: as it was the peak festive season, nearly two lakh tourists could not avail a range of services—from street food vendors to retailers to cab and auto drivers, hotel chains, railways, and airlines.
Speaking on condition of anonymity, a trade leader from Amritsar pegged the loss on account of the bandh to Rs 500 crores in Amritsar city alone.
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Produce in India, feed the world
One more point: the bullock cart is no longer the totem of agrarian India.
On the contrary, the Indian agricultural equipment market—tractors, trailers, harvesters, planting equipment, irrigation and crop processing equipment, spraying equipment, hay and forage equipment, and others—is recording double-digit growth.
Just as the mode of agricultural production is changing, the mode of protest and negotiation must change. Farmer bodies should seek large-scale public investments in agricultural research, education, extension, and infrastructure—grading and sorting machines, cold chains, warehousing, support for exports of agricultural products, equipment, and services to markets abroad.
In the 1960s, it was the Americans who had the surplus to feed their allies. Now, our slogan should be: Produce in India, feed the world.
Sanjeev Chopra is a former IAS officer and Festival Director of Valley of Words. Until recently, he was director, Lal Bahadur Shastri National Academy of Administration. He tweets @ChopraSanjeev. Views are personal.
(Edited by Asavari Singh)