The Game of Rs.2344


The Odisha Legislative Assembly on 25 March 2017 unanimously passed a resolution seeking upward revision of the minimum support price of paddy from Rs.1470 to Rs.2930 per quintal. After hours of debate, it was decided that a House Committee would be constituted under the chairmanship of the Speaker, in which all political parties would have representations and would meet Prime Minister demanding enhancement.

The then Agriculture Minister Pradeep Maharathy moved the resolution, stating that the State government had been repeatedly demanding a higher MSP for paddy, as the MSP fixed by the Union government is not commensurate with the rising costs of inputs such as seeds, fertiliser, manure, micro nutrient, irrigation charges and hiring charges of farm machineries being incurred by farmers. As per statistics of the State government, the cost of production of per quintal of paddy was stated to be Rs.2,344. The minister had proposed fixation of MSP at Rs.2,500 per quintal in the resolution. However, no learned member of the house, across the party lines, asked any clarification from the government, as to how they had arrived at Rs.2344 !

The opposition Congress, however, said the proposed MSP at Rs.2500 per quintal of paddy was too low considering that a farmer spends Rs.2344 to produce a quintal of paddy. The learned leader of opposition even proposed the MSP at Rs.3516, or 150% of the cost of production, taking for granted that cost of production of one quintal paddy stands at Rs.2344. However, the house kindly resolved to demand MSP at Rs.2930 per quintal paddy stating that it was an acceptable figure.

But the Union government announced raising the MSP of paddy by Rs 80 per quintal to Rs 1,550 for the 2017-18 crop year. Now the suggested MSP for the common grade paddy is Rs 1,550 and that of the ‘A’ grade Rs 1,590. Soon after, BJD announced to resort to statewide protest against Union government’s decision.  It declared to stage demonstration at all the 314 blocks in the state from July 10 to July 18 against Modi government’s anti-farmer attitude. The party reiterated its demands to raise the MSP for paddy to Rs 2,930 per quintal based on the logic that a farmer spends Rs.2344 to produce a quintal of paddy.


On the other hand, the Bharatiya Janata Party state unit as usual continues blaming the ruling BJD for doing nothing for the farmers, preferring silence on the issue of unanimity on enhanced MSP on the floor of the house. Opposition Congress blames both BJP and BJD. The farmer’s organizations feel that they are neglected and therefore the number of farmers committing suicide may be more in coming days. The intellectuals calculate and find that the farmers shall incur loss @ Rs.794 on each quintal of paddy they shall produce!

To provide assured remunerative and stable price environment for increasing agricultural production and productivity, MSP for major agricultural products are fixed by the government, each year, after taking into account the recommendations of the Commission for Agricultural Costs & Prices (CACP). It submits its recommendations to the government in the form of Price Policy Reports every year. Before preparing pricing policy reports, the Commission draws a comprehensive questionnaire, and sends it to all concerned. Based on all the received inputs, the Commission finalizes its reports, which in turn gets circulated among the state governments. After receiving the feed-backs, the Cabinet Committee on Economic Affairs (CCEA) takes a final decision on the level of MSPs and other recommendations made by CACP. Once this decision is taken, CACP puts all its reports on the web site for various stakeholders to see the rationale behind CACP’s price and non-price recommendations.

CACP takes into account a comprehensive view of the entire structure of the economy of a particular commodity or group of commodities. Other Factors include cost of production, changes in input prices, input-output price parity, trends in market prices, demand and supply, inter-crop price parity, effect on industrial cost structure, effect on cost of living, effect on general price level, international price situation, parity between prices paid and prices received by the farmers and effect on issue prices and implications for subsidy. The Commission makes use of both micro-level data and aggregates at the level of district, state and the country. But our hon’ble MLAs never desired to go through the reports and in to the reply of Odisha government on the questionnaire before accepting Rs.2344 as base figure. It is astonishing that the lawmakers, many among whom are also farmers and are availing crop loans from the financial institutions at the rate of Rs.20,000 per acre for paddy crop cultivation, have accepted the Rs.2344 figure given by the government without raising any doubt !

Minimum Support Price (MSP) is a form of market intervention by the Government of India to insure agricultural producers against any sharp fall in farm prices. MSP is price to protect the producer – farmers – against excessive fall in price during bumper production years. The minimum support prices are a guarantee price for their produce from the Government. The major objectives are to support the farmers from distress sales and to procure food grains for public distribution. In case the market price for the commodity falls below the MSP due to bumper production and glut in the market, govt. agencies purchase the entire quantity offered by the farmers at the announced minimum price.

It is amusing that on one hand, we are bagging Krishi Karman Award for highest crop production and on the other hand, our Paddy croppers are producing one quintal of paddy at a cost of Rs.2344! Our productivity is too low, stands at less than 10 Qtls of Paddy/ Acre. Still, 75% of our cultivable area is devoted to Paddy. We have very few agriculture based industries like spinning mills, sugar mills, food processing units and alike. Even the Oil and Dal mills depend on the imported crops grown in other states. We are more interested in bagging Krishi Karman Award than to provide our farmers a decent productivity, remunerative price so as to motivate our farmers to grow various cash crops.

Time has arrived to divert our farmers to Cottage, Micro and Small industries at village level, cultivate market demanding non-paddy crops, minimize the cost of cultivation and maximize productivity to earn more profit from farming. We have to double the assured irrigation facility to double the farm production. Our govt., farm varsities and farmers’ organizations must motivate the farmers to adopt community or collective farming. Asking for enhanced MSP alone can never help our farmers.