News20 Media Network
A set of three laws on agriculture passed by Parliament in September has led to thousands of farmers staging protests on the outskirts of Delhi over the past two weeks.
Most of these agitating farmers are from Punjab and Haryana as they are the biggest beneficiaries of the government's minimum support price regime.
The protesting farmers have expressed their apprehension that the new farm laws will eliminate the safety cushion of MSP and scrap the mandis, thereby leaving them at the mercy of big corporates. However, the government has repeatedly assured them that MSP will not be scrapped.
How MSP affects farmers??
MSP is the minimum price paid by the government when it procures any crop from the farmers. It is announced by the state-run Commission for Agricultural Costs and Prices (CACP) for more than 22 commodities on an annual basis, after calculating the cost of cultivation.
Food Corporation of India (FCI) -- which is the main state-run grain procurement agency -- largely buys only paddy and wheat at these prices. The FCI then sells these food grains at highly subsidised prices to the poor and is thereafter compensated by the government for its losses.
However, the FCI procurement is not uniform across India. In Bihar, for example, procurement by FCI has remained at less than 2 per cent of the state's total production. Therefore, most farmers are forced to sell at a discount of about 25 per cent to 35 per cent of MSP.
