{"id":283474,"date":"2024-02-19T18:23:24","date_gmt":"2024-02-19T12:53:24","guid":{"rendered":"https:\/\/forumias.com\/blog\/?p=283474"},"modified":"2024-02-19T18:41:58","modified_gmt":"2024-02-19T13:11:58","slug":"on-raising-farm-incomes-policies-favour-the-consumer-not-the-producer","status":"publish","type":"post","link":"https:\/\/forumias.com\/blog\/on-raising-farm-incomes-policies-favour-the-consumer-not-the-producer\/","title":{"rendered":"On Raising Farm Incomes \u2013 Policies favour the consumer, not the producer"},"content":{"rendered":"

Source:<\/strong> This post on Raising Farm Incomes has been created based on the article \u201cAshok Gulati writes on farmers\u2019 protest: Policies favour the consumer, not the producer<\/strong>\u201d published in \u201cIndian Express<\/strong>\u201d on 19th<\/sup> February 2024.<\/p>\n

UPSC Syllabus Topic: <\/strong>GS Paper 3 Agriculture \u2013 Issues related to direct and indirect farm subsidies and minimum support prices.<\/p>\n

News:<\/strong> The article discusses the demands of the ongoing farmers\u2019 protest. It highlights the implications of accepting these demands and the steps to raise farm incomes in India.<\/p>\n

A detailed article on MSP Guarantee Law and Farmer\u2019s Protest <\/strong>can be read here<\/a>.<\/p>\n

Background:<\/strong><\/p>\n

Farmers protesting on Delhi\u2019s borders are demanding to make minimum support prices (MSPs) legally binding and fixing the MSPs according to the Swaminathan formula<\/strong> (50% profit over comprehensive cost, often referred to as Cost C2).<\/p>\n

What is the Cost C2 formula?<\/strong><\/h2>\n

This cost concept includes not only all the paid-out costs of farmers and value of family labour (Cost A2+FL), but also the rent on owned land and the interest on owned capital. The difference between Cost A2+FL and Cost C2 is roughly 25 to 30% for most crops.<\/p>\n

The current MSP formula that the government has accepted is minimum 50% margin over Cost A2+FL. If this is replaced by Cost C2 plus 50% margin, in most crops covered under MSP regime, the MSPs will go up by 25 to 30%.<\/p>\n

What will be the implications?<\/strong><\/h2>\n
    \n
  1. Raise the Fiscal Deficit<\/strong>.<\/li>\n
  2. Raise Food Inflation. <\/strong><\/li>\n
  3. Similar Demands from other Sectors:<\/strong> If the government agrees to raise the MSP (based on Cost C2), and make it legally binding, then milk producers, livestock producers, and horticulture producers will also demand the same treatment.<\/li>\n<\/ol>\n

    What should be done to increase farmers\u2019 incomes?<\/strong><\/h2>\n

    1) Focusing on Livestock, Fisheries and Horticulture Sector: <\/strong>These sectors need a well-integrated value chain<\/strong> approach. For instance, the Amul model in milk or the vertically integrated poultry sector.<\/p>\n

    2) Raising Agricultural Productivity: <\/strong>The best way to raise farmers\u2019 incomes in the 23 MSP crops is to raise productivity in a sustainable manner. This requires investments in agri-R&D and irrigation.<\/p>\n

    3) Ensure Access to Markets: <\/strong>Access should be enabled to markets not only in India but across the world. This can be achieved by:
    \na. Remove all bans on agri-exports.
    \nb. Remove stocking limits on private trade.
    \nc. Stop selling wheat and rice in the open market at below the economic cost of the Food Corporation of India (FCI).<\/p>\n

    4) Rethinking Consumer-Centric Subsidies: <\/strong>India\u2019s agri-food policies are highly tilted towards consumers at the cost of farmers. For instance, 80% subsidies currently are geared towards consumers to keep food prices low.
    \nInstead, according to the author, 75% of the subsidies should be focused on producers (in the form of a price stabilisation fund<\/strong> or PM-Kisan<\/strong>).<\/p>\n

    Question for practice:<\/strong><\/p>\n

    What steps should the government take to increase farmers\u2019 incomes in India?<\/p>\n","protected":false},"excerpt":{"rendered":"

    Source: This post on Raising Farm Incomes has been created based on the article \u201cAshok Gulati writes on farmers\u2019 protest: Policies favour the consumer, not the producer\u201d published in \u201cIndian Express\u201d on 19th February 2024. UPSC Syllabus Topic: GS Paper 3 Agriculture \u2013 Issues related to direct and indirect farm subsidies and minimum support prices.… Continue reading On Raising Farm Incomes \u2013 Policies favour the consumer, not the producer<\/span><\/a><\/p>\n","protected":false},"author":10320,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"jetpack_post_was_ever_published":false,"footnotes":""},"categories":[1230,9],"tags":[218,216,10500],"class_list":["post-283474","post","type-post","status-publish","format-standard","hentry","category-9-pm-daily-articles","category-public","tag-agriculture","tag-gs-paper-3","tag-indian-express","entry"],"jetpack_featured_media_url":"","views":"","jetpack_sharing_enabled":true,"_links":{"self":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/posts\/283474","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/users\/10320"}],"replies":[{"embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/comments?post=283474"}],"version-history":[{"count":0,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/posts\/283474\/revisions"}],"wp:attachment":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/media?parent=283474"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/categories?post=283474"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/tags?post=283474"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}