Minimum Support Prices for Agricultural Produce

Farm laws must reflect regional and crop diversities


From UPSC perspective, the following things are important :

Mains level: Paper 3-

The article argues for consideration of the regional variation in the conditions of farmers and their concerns in the context of recently introduced farm laws.

Argument against diversification

  • In Punjab, Haryana and western UP, minimum support price (MSP)-based agriculture has a logic.
  • Not all regions must diversify.
  • The region has great alluvial soil, good irrigation and almost a century-long tradition of the application of science to agriculture.
  • In south Punjab, with less irrigation, and parts of Haryana not covered by the Indira Gandhi Canal, some diversification to pulses, cotton etc. could work but the solid specialisation in this region remains.

Issue of middlemen

  • Arhtiyas (middlemen) are important in Indian agricultural markets.
  • They are a part of the supply chain in north-west India.
  • Here they are not like the middlemen elsewhere.
  • They function simply as agents of the procurement agencies.
  • This was done by the past government to reduce overhead costs of procurement.

Steps need to be taken

  • The e-markets, forwards and farmer-managed companies are not the dominant mode of rural organisations.
  • Agriculture is the one good sector in otherwise dismal year.
  • So, we need to strengthen it, not feed off on its glory, even outside north-west India.
  • We have the largest spread of agricultural markets in the world according to spatial maps.
  • But they are not APMCs.
  • With weak markets (outside of grains) and without first-stage processing and other infrastructure, the farmer knows he is at the mercy of the trader and comes out on the streets when that is not understood.

Evolution of MSP

  • The MSP played a crucial role in the days of compulsory procurement and zonal restrictions.
  • Each crop had its own report then.
  • Later separate reports were replaced by two reports, one for kharif and another one for rabi, apart from one for sugarcane (an annual crop).
  • The 1982 rabi report stated that relative prices and, in that context, MSP had the role of an intervention mechanism when markets failed, outside the compulsory procurement area.
  • Later, the concept of transport costs and managerial costs became important.

Way forward

  • The Essential Commodities Act should be ditched.
  • Good laws are good because progress starts with them, but not all laws are good everywhere.
  • A modified version of the laws with a roadmap can be on the agenda — not everywhere, but most places outside the lands of the five rivers.


The amended laws should be considered in the context of regional variation in the country and necessary changes should be made to address the concerns of the farmers.

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