Arvind Singh Rathore was born in 1989, which was the year before his grandfather, (late) Thakur Datar Singh Rathore, and his father, Thakur Santosh Singh Rathore, began cultivating soybean on their ancestral farmland in Muradpura, a village on the outskirts of Indore in Madhya Pradesh. The oilseed was quite new to farmers in this area even though others in the State had been sowing it as far back as the late 1970s and early 1980s. Arvind grew up helping his family earn a living growing soybean. For about 15 years now, he has been managing soybean on 25 acres of land, with the help of his father. But something has changed. The young farmer, also a district leader of the Rashtriya Swayamsevak Sangh-supported Bharatiya Kisan Sangh, now wants to leave agriculture and look for another job in another sector. The reasons are many.

Even as the harvesting of soybean was going on, he found time to talk about some of the reasons. He said youngsters like him were no longer interested in farming due to multiple issues that ranged from climate change to the import-export policies of the Union Government. “The yield is very low this time,” he said. “We get two quintals to 2.5 quintals per acre now. There was a time when we used to get more than four quintals. This is less than half of what my grandfather and father used to get. The price is also almost a ₹1,000 less than what we used to get 15 years ago. We do not have any other alternative crops here as maize, a popular alternate crop, is what the nilgai likes.” The nilgai (Boselaphus tragocamelus) is an antelope species which farmers consider to be a nuisance as it destroys crops, Arvind pointed out.

Arvind has also been reaching out to his farmer friends on the impact that the possible import of soybean from the United States could have. “The government is already importing soybean oil and other edible oils. But if soybean is imported from the U.S., our crisis will deepen. The government should set its import-export policy right,” he says.

The MSP issue

There is another issue that he and other farmer leaders are engaged with, which is proper implementation of the minimum support price (MSP) and procurement by the government in local markets. In the ongoing kharif season, the government had announced ₹5,328 as the MSP for a quintal of soybean. But in the Chhawani grain market of Indore, farmers have been selling their produce for as low as ₹ 3,000 per quintal. According to Arvind, “The government had promised MSP, but we are not getting even half the MSP after the harvest. Soybean cultivation gives us huge losses. Both the Centre and State governments claim that they have doubled the income of farmers. The reality on the ground is quite the opposite. Farmers are leaving agriculture. They are compelled to do it to protect their land.”

The Union Government, in a statement on October 6, 2025, had said that the country’s overall oilseed sowing area, during the 2025 kharif season, had decreased by 10.62 lakh hectares compared to the previous year. The decrease in soybean alone was 9.1 lakh hectares. Madhya Pradesh is India’s largest soybean producer — over 40% — harvesting about 52 lakh metric tonnes (LMT) from about 53 lakh hectares.

Dilip Singh is another farmer in the neighbourhood who has been cultivating soybean since 1997. He too agreed with Arvind that farmers are not recovering even the input cost which is the reason for the decrease in cultivation. Their forebears used to cultivate coarse cereals, millets and pulses earlier but switched to soybean based on what the government presented to them — soybean cultivation was linked to ensuring self-reliance in edible oil requirements and in meeting the protein needs of a huge population dependent on vegetarian food.

Upset with the change in fortunes, Dilip rued the shift to soybean. “Now the prices of millets and pulses have increased and the prices of soybean have come down. We should not have shifted to soybean,” he said. In 2014, he used to get between ₹4,200 and ₹4,500 for a quintal of soybean. “This season, I sold soybean for ₹3,300 and ₹3,500 a quintal. If it is very good quality, then it will get ₹4,000. But no one is buying at the MSP rate,” he said.

Both Arvind and Dilip said the Bhavantar Bhugtan Yojana (price difference payment scheme) announced by the government was no solution.

“For one acre, I have to spend ₹8,000 to ₹10,000 as input cost. The harvest machine itself costs ₹2,500 to ₹3,000 to run per acre. The Bhavantar Yojana is a fraud being played on farmers as the model price and average price are different. The government says something and does something else. This is duplicity,” Arvind lamented.

The threat of imports

Sher Singh Thakur, another farmer, said the government should stop any plan to import soybean. “The officials should promote value addition and help the farmer. They should first think about the farmer. Every farmer is facing losses. The government is importing edible oil. But farmers here are unable to sell their soybean at a decent price. We have to take a loan for input costs and 70% of the farmers depend on loans,” he said.

The Executive Director of the Soybean Processors Association of India (SOPA), D.N. Pathak, has seen both the growth and the crisis in the soybean sector. He believes that any shortage in its cultivation will have a direct impact on protein availability as soybean in India is not an oilseed crop. Pathak said, “Only 18% or 19% of the soybean is used to make oil. It is basically a protein crop.” He said SOPA has been requesting the government to ensure that farmers get the correct price. “Productivity is low. It has been low for the last 30 to 40 years. It has not improved. A lot needs to be done to improve productivity. The industry should also work there. The government should certainly make efforts,” he said.

Pathak said that talk about the import of soybean was being floated by an import lobby with vested interests. “They are asking why do we grow soybean? This is a very dangerous story being put forth by some vested interests… the people who want to export soybean in India, and the people who want to import soybean to India. For them it is business. If that happens, the industry will be dead. And the farmer will also be dead.”

He said, “The government has to understand this. We have about 180 plants for extracting soybean oil and for making soybean meal. All of them will have to be closed down. We have about ₹6 billion to ₹7 billion worth of investment. All this will go away. Banks will write off the loans. I don’t know what farmers will do. Whatever they grow in this area instead of soybean … the price of that product will crash as soybean is cultivated in a huge area. It is actually scary.”

A trained professional in electronics, Pathak joined SOPA in 1994, as he had a deep interest in agriculture. It comes as no surprise as his family of farmers is from Uttar Pradesh. “We need about 7 million tonnes to 8 million tonnes of soybean meal,” he says. “This means that we must crush about 100 lakh tonnes of soybean, which is our production now. If we grow more, we export. But we cannot compete because our MSP is so high. So, if somebody were to bring soybean from the U.S., what will happen to this soybean which our farmers grow? Or is there a suggestion that we should not grow soybean? U.S. soybean is roughly $380 a tonne. Our soybean is $620 per tonne. So should we bring U.S. soybean at $380?”

He raises more questions. “Then who will buy the local soybean? What will the farmer do? The whole import talk is absolutely ridiculous,” says a visibly angry Pathak. “I don’t know why it should even happen. Our processors are mainly into oil extraction and making soybean meal. They cannot compete with U.S. processors.”

Kedar Sirohi is a member of the Samyukt Kisan Morcha (SKM) and president of the Congress party’s farmer cell in Madhya Pradesh. According to him, the State’s economy is dependent on soybean. “The production has been coming down of late. Substandard seeds is one of the main reasons. This year, it is particularly low. Sowing has been done across approximately 52 lakh hectares to 53 lakh hectares. But production will be very low in at least 30 lakh hectares. Farmers are likely to get up to 2 quintals to 2.5 quintals an acre,” he said, adding that total production from the State will be at least 20 LMT less, from about 52 LMT-55 LMT, which was the average production rate. He said the market prices at present is 35% to 40% less than MSP. “Soybean is the lifeline of the farmers of Madhya Pradesh. If the yield increases and the proper price is given, it will help farmers. Farmers do not have any tools for price mitigation. Industries are in crisis and this crisis is percolating to farmers. All other countries provide heavy subsidies to farmers and industry. But here, both the sections do not enjoy any subsidies,” he claimed.

The advent of soybean in the State

In the 1980s, Madhya Pradesh first tried black soybean. The present variety, which is yellow soybean, reached farms by the first decade of 2000. Earlier, cooperative societies used to procure soybean till the end of the 1990s and production was good too. Kedar said, “M.P.’s farmers stood on their legs with soybean farming. The losses only began in the last 10 to 15 years. The biggest issue was the seeds. Low quality seeds resulted in a decrease in production and companies began to queue up offering fertilizers and pesticides to enhance production. But this did not work. Rather than it being from lab to land, seeds are coming from market to land,” he said.

When asked about the Bhavantar scheme, he said, “It is a ‘copy paste exercise’ of the price loss coverage of the United States Department of Agriculture, where farmers are given financial support when the prices of their products fell low or their revenue decreased. There is no transparency in fixing the model price.”

The Samyukt Kisan Morcha (SKM), an umbrella organisation of a number farmers’ outfits, in which Sirohi is a member, is opposed to the policies of the State and Union Governments, particularly in the soybean sector. The Morcha claims to have the backing of a lot of farmers such as Arvind who are associated with the Bharatiya Janata Party for the issues they take up. They have also been raising issues such as suicides by soybean farmers. One of their major campaigns is against the possibility of the import of soybean and soybean meal from the U.S. The SKM cited a lack of transparency in discussions and the reluctance of governments to state that agriculture and agri markets are not part of any such negotiations.

They also point towards recent agreements between India and the United Kingdom and the I2U2, on integrated agricultural facilities across India. The SKM had demanded that the Centre scrap all trade negotiations that will impact the lives of farmers. SOPA had also sent a letter to the Centre highlighting the point that the country has sufficient stocks of soybean meal to meet domestic demand and that allowing imports will have “devastating consequences” for India’s agriculture sector.

Arun Chauhan, leader of the All India Kisan Sabha, a constituent of SKM, said that the decrease in production would be about 25% when compared to last year. “There is huge concern among farmers about U.S. imports. This has resulted in decreased cultivation. Farmers fear that that their soybean will not be valued if cheap soybean is imported from the U.S. is dumped in Indian markets. Even otherwise, this year, farmers are likely to face losses worth ₹300 crore in the State; a bulk of this will be from soybean. We have urged the government to intervene. The SKM recently met all District Collectors in an attempt to demand compensation for farmers. Arun said, “We will hold a protest in Bhopal on October 27 raising the issues of farmers who are cultivating soybean and other crops.”

Another farmer, Kailash Parthani, has been a trader for 35 years at the Chhawani grain market. Like Pathak, he has also seen the ups and downs of soybean. He purchases soybean from farmers for processors such as the Patanjali group. He said, “Cultivation is down and yield is less. Traders are also worried about the future of soybean. The Bhavantar scheme is not helping farmers. Unless soybean meal is exported, it will be difficult to survive. If U.S. soybean comes here, it will be a double blow,” he said. Kailash said some farmers are keeping soybean for three to four years expecting that the prices will improve as export picks up. According to SOPA, on an average, India exports about two million tonnes of soybean meal; in this season, it could go down by 1.8 million tonnes. SOPA states that the reason for lack of demand for Indian soybean is its higher price.

The Chhawani market is one of the biggest soybean markets in India. During the season, traders handle about 2,000 tonnes to 2,500 tonnes of soybean a month. Said Kailash, “Traders of this market brought yellow soybean and provided it to farmers for cultivation after the 1990s. The best time was between 1995 to 2015 when we used to get 6,000 tonnes per month.”

Varun, a former secretary of the market, nodded in agreement. According to him, traders in the market deal with buyers from across the country. “We have a membership of about 1,500 traders. There are a lot of workers too in this market. The fluctuations in the soybean market have impacted traders. They are losing revenue. Such fluctuations are basically from the policies of the government. The import policy of the government is a problem. If the government allows imports of soybean, it will be a major problem.”

An average trader in the market makes about ₹70,000 per month. “Import will act against both the trader and the farmer. It is against Atmanibharta,” he said.

Manoj Kala, president of the market, has a clear demand. He wants the government to ensure MSP to farmers and that the de-oiled cake of soybean should be procured by the government.

A reposing of faith in soybean

In another part of Indore, despite the sentiment and arguments expressed from the ground, the scientific community has not lost hope in soybean and its future. The Director of the Indian Council of Agriculture Research (ICAR)’s Indian Institute of Soybean Research, Kunwar Harendra Singh said: “From only 30,000 hectares during the 1970s, the country has now more than 12 million hectares under soybean cultivation. You will not see any other crop having expanded in such a way. So this is the big achievement as far as this crop is concerned.”

He said that the present decrease in the area of sowing is primarily due to a decline in prices. “The government has been increasing the MSP, but the market rates were declining very fast. And then, other options like maize are in demand,” he said. “This is the only plant based group which has 40% protein… This needs the attention of the government and also different industries to create the awareness on how to use this good quality protein,” he added, pointing to the need for more research on the use of soybean as a human food.

Mahavir Prasad Sharma, his colleague at the institute, said there is an incubation centre for start-ups in the institute that helps entrepreneurs develop soybean-based food products. A focus area is developing products that will be a ‘palate pleaser’ as far as youngsters are concerned.

Said Kunwar, “The crop basically belongs to China, and in India earlier, only a few States such as Himachal Pradesh, Uttarakhand and some of the northeastern States used to cultivate it. “More than 90% of soya is being used for cattle feed. We do not have value-added products. We can make different nutritional powders from this. But the industry has to come forward for that.”

Farmers like Arvind are in touch with scientists like Kunwar to understand the latest developments in soybean cultivation and its processing. Arvind, however, said that had ICAR provided them with adequate quantity of good seeds, they would not have depended on private seed suppliers, whom they cannot trust.

New Delhi:

Farmers pushing the government to revamp the MSP, or minimum support price, policy met Congress MP Rahul Gandhi inside the Parliament complex Wednesday morning.

Mr Gandhi, who is also Leader of the Opposition in the Lok Sabha, met a delegation of 12 farmer leaders from Punjab, Haryana, Uttar Pradesh, Telangana, Tamil Nadu, and Karnataka.

Senior Congress leaders KC Venugopal and Deepender Singh Hooda were also part of the meeting, as were MPs Amarinder Singh Raja Warring and Sukhjinder Singh Randhawa.

There was confusion before the meeting as the farmers were not allowed inside. “We invited them… but they are not allowing them inside Parliament. They are farmers, maybe this is why…” Mr Gandhi said.

“…you will have to ask the Prime Minister the reason for this…”

कुछ किसान मुझसे मिलना चाहते थे, इसलिए मैंने उन्हें अंदर ऑफिस में बुलाया था।

लेकिन उन्हें अंदर आने नहीं दिया गया, इसका कारण आपको प्रधानमंत्री से पूछना पड़ेगा।

: नेता विपक्ष श्री @RahulGandhi

संसद परिसर, नई दिल्ली pic.twitter.com/jbidAjAFqV

— Congress (@INCIndia) July 24, 2024

“Rahul Gandhi will raise the voice of farmers inside Parliament…” Mr Warring told NDTV after the meeting. On reports the farmers are planning another march on Delhi, he said, “They have all rights to come to Delhi and protest (and) if a private member’s bill is required then we will bring that too.”

Earlier, sources said the farmers spoke to Mr Gandhi about issues in their respective states, and also asked him to introduce a private member’s bill to fulfill long-standing demands – to revise MSP and ensure legal backing. These demands have been at the core of their protests since it began in 2020.

Farmer unions across the country want the MSP – a purchase guarantee set by the government to protect agriculturists from steep fall in crop prices – to be based on the Swaminathan Commission’s C2+50 formula, which factors in cost of capital and land rent when calculating support prices.

READ | “Rejected”: Farmers Dismiss Centre’s 5-Year MSP Contract Offer

The government, however, is reluctant to drop the existing A2+FL+50 per cent method.

Apart from changing the formula, farmers also want legal backing for this purchase price; at present the government is not obliged to buy, for example, 10 per cent of a paddy crop at the floor price.

In 2020/21 lakhs of farmers gathered to march on Delhi, prompting the government to set up war-zone like defence measures around the national capital. The ‘farmer army’ – complete with tractors and supplies for a months-long siege – was held to makeshift camps blocking key roads into the city.

NDTV Explains | What Are Key Demands Of Farmers That Remain Unresolved?

The furore over the protests also made international headlines and sparked bitter fights between the ruling Bharatiya Janata Party and the opposition, led by Mr Gandhi’s Congress.

After months of blockades around Delhi and violent clashes between farmers and police in various states, the government was forced to stand down and roll back three contentious farm laws.

The MSP issue, however, has rumbled on, with farmers insistent the formula change.

A second round of protests – a ‘Delhi Chalo 2.0’ that also demanded loan waivers and freezing of electricity tariffs for farmers – erupted in February, months before a general election in which the BJP lost seats in key states and after talks with the farmers failed to resolve the situation.

READ | Farmers Prep For Delhi March After Haryana Told To Remove Blocks

The February protests were paused after the government made a fresh offer, but that was rejected by the farmers; the government had, they said, again failed to meet a core demand – the MSP row.

NDTV Explains | Centre’s 5-Year MSP Plan, And Why Farmers Are Not Convinced

The government had proposed a five-year MSP contract, based on the old formula.

Meanwhile, on Monday two farmer unions – the Samyukt Kisan Morcha (non-political) and Kisan Mazdoor Morcha – declared they would burn effigies of Prime Minister Narendra Modi.

They also plan to take out a nationwide tractor rally on August 15, Independence Day.

NDTV is now available on WhatsApp channels. Click on the link to get all the latest updates from NDTV on your chat.

Image for representation purpose only.
| Photo Credit: K.R. Deepak

The Minimum Support rices (MSPs) for both kharif and rabi seasons 2023-24 ensured a minimum return of 50% over the cost of production for all crops, said the Reserve Bank’s Annual Report released on May 30.

The overall public stock of foodgrains as on March 31, 2024 stood at 2.9 times the total quarterly buffer norm, the report said.

On November 29, 2023, the government extended the scheme of free distribution of foodgrains under the Pradhan Mantri Garib Kalyan Anna Yojana (PMGKAY) for five more years, effective from January 1, 2024.

The report, which is a statutory report of  Reserve Bank of India’s (RBI) central board of directors, noted that the agriculture and allied activities faced headwinds from the uneven and deficient South-West Monsoon (SWM) rainfall coinciding with strengthening El Nino conditions.

The overall SWM rainfall in 2023 (June-September) was 6% below Long Period Average (LPA) at the all-India level.

As per the second advance estimates, the production of kharif and rabi foodgrains in 2023-24 was 1.3% lower than the final estimates of the previous year.

Also read: Guaranteed MSP is an ethical imperative

The output of millets could benefit from productivity gains, the report said.

MSPs in 2023-24 were increased in the range of 5.3-10.4% for the kharif crops and 2.0-7.1% for the rabi crops.

Moong witnessed the maximum MSP increase among kharif crops, while the increase was the highest for lentils (masur) and wheat among rabi crops.

Prakash Kammaradi, Agriculture Economist, at a press conference in Mangaluru on Saturday, April 20.
| Photo Credit: H.S. MANJUNATH

The government should announce legally backed minimum procurement price for food crops and the Congress and the BJP, two major political parties contesting the Lok Sabha elections, should make their commitment on the same clear, former Chairman of Karnataka Agriculture Price Commission Prakash Kammaradi said here on Saturday, April 20.

Addressing presspersons, he said that there are 21 food crops. If the government was to purchase them by offering a minimum support price backed by the legislation, it might have to reserve ₹5 lakh crore per annum. The fund will not be a huge burden to the Union government.

He said that farmers have been demanding to offer the minimum support price for food crops with legal backing. The government should fulfil their demand.

The Congress has now promised that it will procure food crops by offering legally backed minimum support price (MSP). But it should become a reality if it forms the government. The Union government led by the BJP too has said that it is ready to procure cotton, jowar, and pulses by offering minimum support price. Its commitment to offering legally backed MSP should become clear, he said.

The commission headed by him submitted a report on the legally backed MSP to the government in 2018.

If the stock of food grains purchased by the government by offering MSP was in excess then the government can distribute the same among children and women suffering from malnutrition. A legally backed MSP scheme avoids the intervention of middlemen while farmers selling their produces, he said.

Amid the heat of the ongoing Lok Sabha electioneering, the Centre has announced plans to significantly increase wheat purchase from non-traditional States of Uttar Pradesh, Rajasthan and Bihar and set a target of seven-fold jump in procurement to 50 lakh tonnes in the ongoing 2024-25 marketing year.

Further, even as the ban on outbound shipments of wheat continues, “it will be a dream for us to export now”, Food Secretary Sanjeev Chopra told reporters on April 4.

“U.P., Bihar, and Rajasthan have been contributing much less than they could have. We are targeting total wheat procurement of 310 lakh tonne this year. Of which, we are hoping to procure at least 50 lakh tonne from three non-traditional procurement States alone,” he said.

While Uttar Pradesh, Rajasthan, and Bihar put together contributed only 6.7 lakh tonnes to the Central pool during the 2023-24 marketing year (April-March), the Union Food Ministry has decided to procure 16% of the total wheat procurement target of 310 lakh tonne set for 2024-25. Wheat procurement at Minimum Support Price (MSP) is normally undertaken by the Centre’s nodal agency Food Corporation of India (FCI) and State agencies. However, cooperatives Nafed and NCCF have also been roped in with a procurement target of five lakh each this year.

Wheat MSP has been fixed at ₹2,275 per quintal for the current year. Since October, the Centre has been working with these three States to increase the procurement level. “Various steps have been taken to address the gaps and it should help boost procurement levels in three States,” he said.

Asserting that 2024 general elections is unlikely to affect wheat procurement operations, the Secretary said the increase in wheat procurement from non-traditional States will help restore allocation of wheat under the Pradhan Mantri Garib Kalyan Anna Yojana and other welfare schemes.

“The allocation of wheat has been reduced to 184 lakh tonnes annually from the previous 230-240 lakh tonnes under various welfare schemes in view of lower procurement in the last two years,” he added.

Mr. Chopra also said the Centre has not directed traders to avoid buying wheat from farmers till the government completes procurement. “No such instruction has been given to traders,” he added.

Highlighting steps taken to strengthen wheat procurement in non-traditional States, the Secretary said the procurement window has been advanced/extended to March instead of April 1, set up a dedicated farmer helpline to address procurement-related queries, intensified media publicity of MSP rate, and drying facilities have been provided for early harvested crop.

Besides, the government has advanced farmer registration from January 1 instead of March 1, simplified farmers’ land record verification, including tenant farmers, given flexible procurement targets to agencies.

More importantly, the Secretary said the government has decided to ensure transfer of MSP to bank accounts of farmers within 48 hours, streamlined procurement incidental burden for farmers, smoothened banking-related issues such as Aadhaar integration with bank accounts.

“The government has also opened more procurement centres targeting production hotspots, set up mobile procurement centres, decide to leverage Self Help Groups, Panchayats, Farmer Producer Organisations,” he said.

“That apart, the government has ensured institutional preparedness through working capital to agencies to ensure payment of MSP to farmers within 48 hours,” he added.

The Secretary further mentioned that a Central control room has been set up in the FCI headquarters in Delhi for real-time monitoring of procurement ad coordination among various agencies.

According to the Food Ministry, six lakh tonnes of wheat have already been procured so far this year from six States — Uttar Pradesh, Madhya Pradesh, Rajasthan, and Bihar. The procurement from traditional States of Punjab and Haryana will begin soon.

On prices of wheat and rice, the Secretary said wheat flour and wheat prices are stable at present after introduction of retail sale of wheat flour at ‘Bharat’ brand. About 7.06 lakh tonne of wheat flour has been sold till now.

“Even retail inflation of rice remained stable at 13% and 14% for the last two months. About 3.1 lakh tonne of FCI rice has been sold under Bharat brand since February,” he added.

Asked if the government will revisit the wheat export ban amid estimates of higher production, the Secretary said, “It’s a dream for us to export now.” The government has banned wheat exports since May 2022 to boost domestic availability and check prices.

The wheat production is estimated to be a record 112 million tonne during 2023-24, compared to last year’s 110 million tonnes as per the Agriculture Ministry.

The perennial issue of fair pricing of farm produce reigns supreme, now coupled with calls for legal assurances of Minimum Support Price. File
| Photo Credit: PTI

As the general elections draw closer, agrarian concerns have once again taken centre stage. Farmers from the heartland of the Green Revolution have travelled to the border of the capital to not only voice their distress, but also to shape the electoral discourse. The ruling dispensation, sensing adverse electoral implications, attempted to reach out to the farmers. It said it was ready to procure pulses, maize, and cotton at MSP, but this was contingent upon farmers guaranteeing crop diversification. However, these efforts were rejected as the core issues were not addressed, say farm leaders.

The perennial issue of fair pricing of farm produce reigns supreme, now coupled with calls for legal assurances of Minimum Support Price (MSP). However, beyond mere legal mandates lies the pressing concern of maintaining self-sufficiency in food production and addressing the ongoing challenge of distribution. This underscores the ethical imperative of anchoring a legal guarantee for MSP.

The MSP regime was a vital instrument for ensuring food security in India. Given the unique nature of agriculture, farmers lack the ability to exert significant influence, let alone determine the price of their produce. This constitutes a ‘market failure.’ Thus, MSP ensures that agricultural commodity prices remain above a predetermined benchmark to facilitate remunerative price discovery.

Produce and perish trap

The MSP is announced annually for 23 crops covering both the kharif and rabi seasons, well in advance of sowing, with 21 of them being food crops. However, despite the announcements, the implementation of MSP remains poor. Only 6% of farmers, primarily those cultivating paddy and wheat in States such as Punjab, benefit from MSP. Most transactions involving these essential food commodities occur below the MSP, rendering farming economically unviable for the majority of producers in India. As a result, farmers are trapped in a dangerous cycle of produce and perish, leading to crippling debt and deaths by suicide. All these emphasise the pressing need to ensure MSP, including the one recommended by the eminent agricultural scientist M.S. Swaminathan (with a 50% profit margin).

Several articles under the Constitution, as well as the United Nations Declaration on the Rights of Peasants, support the legal recourse to guaranteeing MSP. According to a recent opinion survey by an English TV channel, 83% of landowners and 77% of farm labourers expressed solidarity with the agitating farmers. Notably, 64% of the public also endorsed the farmers’ demand for a legal right to MSP.

Sugarcane growers already benefit from a ‘statutory’ MSP, which sugar factories strictly adhere to when purchasing cane from farmers. A few years ago, Maharashtra attempted to amend its Agricultural Produce Market Committee (APMC) Act to prevent the purchase of agricultural produce below MSP, but the effort failed due to a lack of political will and a comprehensive strategy. The Karnataka Agricultural Price Commission has laid out a clear roadmap, including potential financial commitments, to ensure a legally binding MSP for crops cultivated in the State. A private member bill on The Farmers’ Right to Guaranteed Remunerative MSP for Agricultural Commodities was tabled in Parliament in 2018. The Andhra Pradesh government unveiled a draft bill last year aimed at guaranteeing MSP for crops grown in the State. These efforts show that the objective of establishing a legal recourse to MSP has not emerged suddenly, nor is it impossible to attain.

The solution

A minor amendment to respective State APMC Acts or the Centre’s Essential Commodities Act would suffice to introduce a law ensuring that no transactions of farmers’ produce occur at prices below the MSP. The budget outlay will not be as large as projected if legal recourse to MSP is accompanied by essential backward and forward linkages. Crop planning, market intelligence (including price forecasts), and other pre-sowing measures, along with the establishment of post-harvest infrastructure for efficient storage, transportation, and processing of farm commodities, greatly assist in managing the post-harvest glut in the market. Therefore, a legal route to MSP, complemented by the development of such linkages, would provide protection against “market failures” in addressing the surplus, rather than leading to “market distortion,” as claimed by some mainstream economists.

Even enhancing MSP to provide a 50% profit margin over total cost is not challenging, considering that current margins already stand at around 22%. Finally, effective procurement and distribution, as envisaged under the National Food Security Act, 2013, is the most appropriate means to not only ensure MSP but also address hunger and malnutrition.

The PM-AASHA comprises schemes for price support and price deficiency payment, along with incentives to private traders to ensure MSP. While it possessed all the necessary elements as precursors to guarantee the MSP, its side-lining in policy circles highlights how political expediency rules the roost.

At present, farmers hardly get 30% of the price paid by the consumers; this will increase if MSP is guaranteed. Establishing a legally binding MSP will anger intermediaries as their share will get reduced. Often, government intervention, and particularly a legally binding MSP, is deemed a problem. It is this adherence to free market dogma that is preventing a just solution to the ongoing crisis in farmer incomes.

T.N. Prakash Kammardi is an agricultural economist and former chairman, Karnataka Agricultural Prices Commission, Government of Karnataka

Are the protests for a legalised MSP justified?

Lakhwinder Singh: These protests have been building up over time. In 2018 too, we saw tens of thousands of farmers from Maharashtra take to the streets. But their demands are perhaps not being listened to seriously, whether by State governments or the Central government.

Watch |What is Minimum Support Price?

There is a context to this. India introduced economic reforms in 1991 with a promise that we will soon become industrialised and the rural workforce will move from the agricultural to the industrial sector. More than 30 years later, agriculture has been squeezed in many ways but no one is talking about this agricultural crisis.

One of the most important demands of the farmers protesting this time is a legal guarantee for MSP. The public distribution system (PDS) gave support to farmers and ensured national food security. Now, India is expected to shift from food security to nutrition security. A legal guarantee for MSP for 23 crops is perhaps the way to do this. The farmers also want India to exit the WTO. We are in a phase of de-globalisation. When we have food shortages, for instance, the government imposes a ban on exports of food items (in defiance of the WTO). In a way, the demand of the farmers is in consonance with what the government does.

Also read | ‘MSP guarantee can nudge farmers to diversify beyond paddy and wheat, bolster incomes and consumption’

Siraj Hussain: The farmers are rightly concerned about the low prices of various crops. But their demands will not be accepted by any government in a hurry. We need a detailed, thorough review of agricultural trade policies and production and also what will happen to agriculture in the next 20-25 years.

After the 2020-21 protests, the government took seven months to set up a committee to look into this issue of MSP. More than a year and a half later, the committee has not even submitted an interim report.

Also read | Legal guarantee for MSP will make farmers drivers of GDP growth: Rahul Gandhi

Should MSP on all these crops be legalised? And will MSP survive without public procurement?

Siraj Hussain: The mandi system in the form of APMCs (agricultural produce market committees) is functional only in a few States. In most others, it is not functional. Less than one-third of the crop production in India is traded through mandis; the rest is sold by marginal farmers to village traders. So, even if MSP becomes legalised, it will be difficult to implement it because there is no record of who is buying and selling and at what rate. The government cannot be buying all the 23 crops – even for wheat and rice it faces lot of difficulties in procurement.

Lakhwinder Singh: Legalisation of MSP is in national interest. A large number of farmers sell commodities in informal markets. The government wants to make transactions digital and formal, so this is in consonance with the government’s aim. Also, the gross fixed capital formation in the agricultural sector after the 1991 reforms has gone down tremendously. Farmers are in distress. Legalising MSP is the answer. Let me add that the government is not expected to buy all the 23 crops. But if at least 5-10% of the produce is purchased, it would be a marginal intervention and stabilise the prices.

Editorial | Farming consensus: On the government and the farmers on protest

Is it possible to extend the MSP system to the entire country, especially for subsistence farmers, as the government claims?

Siraj Hussain: Yes. Madhya Pradesh, Chhattisgarh, and Odisha have shown that the procurement system can be expanded. Even in Bihar, West Bengal, and Tamil Nadu, procurement of rice has increased over the last few years. But that is not the question. The question is whether the government should be procuring so much. It has been procuring 50-60 million tonnes of rice. Is that a good policy regime? The root cause is PDS and now the government has made it free. That means that the government will continue to procure large quantities of wheat and rice.

Another concern is that legalised MSP will result in high prices affecting the consumers.

Siraj Hussain: I do not think it is possible for any government to procure all the commodities. It is not possible for the government to fix an MSP for everything. The basic question is how to ensure a remunerative price to farmers. My view is that it should be a State by State policy. Every State has a different regime. In Punjab, for instance, a price payment deficiency system is possible because the mandi system is well developed and the distance between two mandis is only 6 km, whereas at the all-India level it is 12 km. The States and the Centre should be talking to one another. Experts have to come up with a policy which will ensure that farmers receive a fair and remunerative price.

Where is the farmers’ protest heading? | In Focus podcast

Another question which you should be asking macroeconomists is on food inflation. The government must also look after the interests of consumers. They have to try and balance the policies of import, export, and domestic MSP.

Lakhwinder Singh: When the government is not interested in legalising MSP and intellectuals are not interested in discussing these issues, fear is created among consumers that they are going to be fleeced. And a binary is created of farmers and consumers. The government is an intermediary, which has to protect the rights of both consumers and producers.

In Frames |Farmers’ protests 2024

The most striking issue is food inflation. The local prices at which farmers are selling their produce are very low and do not cover the major costs involved (in production). On the other hand, consumers are facing huge price rise. Legalising MSP will reduce inflation, protect consumers, and give a relatively reasonable income to the farmers.

Also, regulating markets is important. The government has withdrawn from the regulatory mechanism and therefore in unorganised markets, intermediaries are active and creating inflationary pressures on the economy.

Farmers are also worried about input cost calculation methods such as A2+FL and C2+50%. What could be the best mechanism to calculate the input costs?

Lakhwinder Singh: The idea of C2+50% cost has come from industry. Agriculture requires remunerative prices. I think the C2 estimation of costs for agricultural crops is going to be almost comparable with other prices which we have in various sectors of the economy.

Siraj Hussain: There have been several suggestions, including a report by Dr. Ramesh Chand, about certain changes in the methodology of calculating the cost of cultivation. Those changes have not yet been decided. The problem is whatever price you fix, you are not able to ensure the A2+FL price. Sometimes, the price is so low that it is below the cost of cultivation.

Also read | Don’t consider our discipline and preference for dialogue as weakness: RSS farmers body tells government

The answer is not easy to find. The government cannot be deciding the prices of every agricultural commodity. Many farmers and organisations prefer selling to corporates because there used to be a lot of glut of at one point of time. Now, at least there are some large buyers. So, we can’t say that corporates should be completely prevented from purchasing and storing agricultural commodities.

Are cooperatives an alternative to help farmers?

Siraj Hussain: Cooperatives have been successful in certain sectors. For example, in the milk sector, they brought the White Revolution in Gujarat. It was due to the failure of cooperatives that the government came up with the idea of farmer-producer organisations (FPOs). Now, we are going back to cooperatives. Any form of aggregation which can help the farmers in realising better prices is welcome. But both cooperatives and FPOs have been captured by influential vested interests in rural areas. If cooperatives can create storage structures where the farmers can store their produce at reasonable prices to reap the benefits of higher prices in the off season, they are welcome.

Lakhwinder Singh: When we have to look for alternatives, we cannot rely on a single intervention. If you want to promote cooperatives, bring in a law and storage capacity. Government-supported cooperatives have failed because of corruption. This organisation has a future, but we need a legal framework within which they can flourish. And they need supportive infrastructure.

Listen to The Hindu Parley podcast

Union Minister Anurag Thakur addresses the media during cabinet briefing, in New Delhi, on Oct. 18, 2023.
| Photo Credit: PTI

Ahead of assembly polls in key wheat growing states, the government on Wednesday announced an increase in the minimum support price (MSP) of wheat by ₹150 to ₹2,275 per quintal for the 2024-25 marketing season.

This is the highest increase by the Narendra Modi-led government since it came to power in 2014.

Also read: Explained | Will a hike in MSP help farmers?

A decision in this regard was taken in the meeting of the Cabinet Committee on Economic Affairs (CCEA) chaired by Prime Minister Modi.

Currently, the MSP on wheat stands at ₹2,125 per quintal for the 2023-24 marketing season (April-March).

Briefing media, I&B minister Anurag Thakur said the CCEA has approved the increase in the MSP for all mandated rabi crops for 2024-25 marketing season.

“Based on the CACP recommendation, we have increased the MSP of six rabi crops. Wheat MSP has been increased by ₹150 per quintal,” he said.

Also read: Explained | What will a legal guarantee of MSP involve?

The support price of wheat has been increased to ₹2,275 per quintal for 2024-25 marketing season, from ₹2,125 per quintal in 2023-24, he added.

Wheat is the main rabi (winter) crop, sowing of which begins in October, while harvesting in April.

MSP is the minimum rate ensured to protect the interest of farmers and below this rate the grain is not purchased by the government procurement agencies.

“In case of any shortfall in production of any crop, prices can increase at a faster rate and add to inflation.”
| Photo Credit: MOHD ARIF

The inflationary impact of the 5%–11% increase in the minimum support price (MSP) for farm produce will be an additional factor for the RBI’s Monetary Policy Committee (MPC) to consider in its ongoing bi-monthly policy review to be announced on Thursday.

The spillover effects on consumer food prices from higher assured remuneration to farmers will hinge on the government’s procurement strategy for foodgrains and prevailing market prices, but any production shortages could lead to higher prices, economists cautioned. 

For instance, the 7% increase in paddy MSP could lead to higher prices if the crop is not higher than last year’s output, said Bank of Baroda chief economist Madan Sabnavis, who termed the increases in MSP ‘quite aggressive’ relative to past increases, which had been in the 4% to 6% range.

“Procurement takes place for rice, whose inflation is already high at 11%,” noted Mr. Sabnavis. “So an increase of 7% will add to benchmark prices in the market. Similarly, jowar, bajra and maize are all running inflation of 13%-15% and hence, also run a risk of higher prices in case of crop failure in any part of the country,” he added.  

“In case of any shortfall in production of any crop, prices can increase at a faster rate and add to inflation. The crux will hence be the size of the crops this season,” he said, stressing that food prices are the major risk to inflation so the Reserve Bank of India will be cautious until there is more clarity on kharif crop prospects. 

State Bank of India economists said that the impact of higher MSPs on inflation “will be negligible” depending on the prices prevailing in the e-National Agriculture Market (e-NAM) as well as procurement levels. 

While procurement of cereals was primarily in terms of wheat and rice, the procurement of pulses was not much, noted SBI Group chief economic advisor Soumya Kanti Ghosh. Moreover, he pointed out that the average modal prices in e-NAM mandis were already higher than the MSP for some of the crops. 

File photo used for representational purposes only. The Union Cabinet approved a ₹143 hike in the MSP of paddy to ₹2,183/quintal for 2023-24.
| Photo Credit: Nagara Gopal

The Centre has set the Minimum Support Price (MSP) for paddy sown in the kharif or monsoon season at ₹2,183 per quintal, a hike of ₹143 per quintal in comparison to last year. The 2023-24 MSPs for 17 kharif crops and variants were approved at a meeting of the Cabinet Committee on Economic Affairs (CCEA), chaired by Prime Minister Narendra Modi, .

The sowing of the crops, mainly paddy, has started in most States. While the Centre said that its aim was to ensure reasonably fair remuneration for the farmers and to encourage crop diversification, several farmers’ organisations said that the increase was not in tune with rising input costs.

Also Read | An MSP scheme to transform Indian agriculture

‘Highest increase’

Food Minister Piyush Goyal told reporters after the CCEA meeting that farmers will benefit from the increase in the MSP at a time when the retail inflation is declining. “In agriculture, we have been fixing MSP from time to time based on the recommendations of Commission for Agricultural Costs and Prices (CACP). The increase in MSP of the kharif crops for this year is highest compared to the previous years,” he said.

Apart from paddy, new MSPs have been set for major pulses. The MSP for moong is ₹8,558 per quintal, an increase of ₹803 from last year, one of the highest increases among kharif crops. The MSP for tur or arhar has been set at ₹7,000 per quintal, which is estimated to be 58% above the cost of production. This is in keeping with the Centre’s promise to set MSPs which are at least one and a half times the all-India weighted average cost of production.

Bajra, tur margins high

“The expected margin to farmers over their cost of production are estimated to be highest in case of bajra (82%) followed by tur (58%), soybean (52%) and urad (51%). For the rest of the crops, the margin to farmers over their cost of production is estimated to be at least 50%,” said an official statement.

The MSP of ‘A’ grade variety of paddy has been increased to ₹2,203 per quintal from ₹2,060. For jowar (hybrid) and jowar (maldandi) the rates are ₹3,180 and ₹3,225 per quintal respectively. Last season, it was ₹2,970 and ₹2,990. For maize, the increase is ₹128 per quintal and the new rate will be ₹2,090. For ragi, this year’s MSP will be ₹3,846 per quintal, which is an increase of ₹268.

Among oilseeds, the MSP for sesamum is ₹8,635 per quintal, ₹6,377 for groundnut, and ₹4,600 for soybean. In the case of niger seed, the new MSP is ₹7,734 per quintal, and for sunflower seed, it is ₹6,760. For cotton (long stable) and cotton (medium stable), the MSPs are at ₹7,020 per quintal and ₹6,620 per quintal respectively.

‘Faulty production estimates’

The Samyukt Kisan Morcha, a platform of about 500 farm outfits, questioned the Centre’s claims and said that the new MSPs were not linked to the real expenses of farming. Senior SKM leader Ashok Dhawale said that the MSP for kharif crops is nowhere near the C2+50% formula proposed by the Swaminathan Commission.

“The cost of production estimates given by the government are themselves extremely faulty and underrated, and thus the MSP figures are also very unsatisfactory. The SKM and All India Kisan Sabha express anger at the constant short-changing of farmers by the BJP regime led by Narendra Modi, and vow to intensify their struggle for a fair and just MSP, which can only be won by changing the current BJP government in the general elections next year,” he said in a statement.

Senior farm leader Hannan Mollah said that the Centre has not taken into account the increase in irrigation costs and fertiliser costs. “The government has betrayed the farmers by announcing MSP far below C2+50%. It has not put up the ‘Report on Price Policy of Kharif Crops for 2023-24 Season’ by the CACP yet,” he added.