After deficient rains last year in both the South-West and North-East monsoons which dampened agricultural output, a stalling monsoon this year has delayed sowing operations. Therefore, the Centre’s announcement of Minimum Support Prices (MSPs) for the upcoming kharif is timely, ensuring that farmers have visibility on prices if not on yields. Hikes in MSP have been quite handsome for most crops at 6-13 per cent over the previous year.

Two factors seem to have dictated the fixation of crop-wise MSPs. The need to step up output of oilseeds and pulses — particularly tur which is an exclusively kharif crop — where India is highly import dependent. There were significant reverses in the output of pulses (down 6 per cent), oilseeds (down 4 per cent), maize (down 8 per cent) and coarse cereals (down 4 per cent) last season. MSP increases this year seem designed to encourage farmers to shift to higher acreages of ragi (11.5 per cent increase in MSP), tur (7.8 per cent increase) and oilseeds such as sunflower seed (7.7 per cent), sesamum (7.3 per cent) and nigerseed (12.7 per cent). In line with poll promises, MSPs for the current year also factor in margins of 50 per cent or more over cultivation costs (including family labour) for each crop. MSPs for crops such as bajra, tur and maize in fact factor in margins of 54-77 per cent.

MSP announcements do influence sowing decisions. But policymakers should bear in mind that they alone are not sufficient to nudge farmers away from paddy to other crops; they need to be backed by significant procurement by the state. While there is a well-oiled Central as well as State procurement machinery for paddy and wheat to feed the PDS (Public Distribution System), procurement mechanisms for other crops such as millets, oilseeds haven’t yet evolved. Last year, well over a third of the marketable surplus for paddy and over 40 per cent of the surplus for pulses were mopped up by official agencies, but maize, millets and oilseeds saw less than 6 per cent of their marketable surplus being procured. To better meet the nutritional needs of lower income households, the PDS in any case needs to diversify beyond cereals into millets, pulses and edible oils.

Then there is the problem of uneven distribution of benefits from state procurement even with respect to rice and wheat. As the State cannot procure the entire marketable surplus of any crop or ensure even purchases across farmer segments or regions, the real solution to remunerative prices for farmers lies in them being able to freely market their produce to private buyers, both in the domestic and export markets. For this the Centre needs to prevail upon States to lower the barriers that impair inter-State movement of produce. Farmers need timely access to market intelligence and must be empowered vis-à-vis intermediaries and large corporate buyers, through collective initiatives such as co-operative societies and farmer-producer organisations.