You are here: Home » Economy & Policy » News
Business Standard

Farmers' protest: MSP distorting cropping patterns, says WTO report

The practice of procurement from certain states has also resulted in regional disparities in production

Topics
minimum support price | Farmers MSP | World Trade Organization

Nikunj Ohri  |  New Delhi 

farmers, protests, farmers' protests, farm laws, agitation
The practice of procurement from certain states has also resulted in regional disparities in production

Amid demand by farmers on legalising the (MSP), the (WTO) has taken up a review of India’s trade policy, that states floor prices distort cropping patterns.

Distortion of cropping patterns is in favour of commodities such as wheat, rice, cotton, and sugar that are pro­cured by the central government at MSP and away from other items such as pulses, coarse grains, and oilseeds, said a report by the WTO Secretariat, written independently.

The practice of procurement from certain states has also resulted in regional disparities in production, the report taken up for review among other trade policies said.

“It is also suggested that due to fragmentation of agricultural markets and weak infrastructure, farmers rece­ive only a fraction of the price paid by consumers, with the bulk going to intermediaries,” it said. India’s last policy review took place in 2015.

The issue of guaranteed MSP is one of the main concerns of farmers currently protesting near Delhi to repeal new farm laws introduced by the government. The government has held seven rounds of consultations with farmer unions that have remained inconclusive over their two key demands of repealing the newly enacted laws, and provision of legal guarantee on the MSP.

India’s agricultural policy aims at providing stability in domestic food prices and food security, and to ensure this its food subsidy accounts for almost half of the government’s total subsidies, the report said. An additional third of total explicit subsidies are accounted for by the subsidy for fertilisers.

The report quoted an independent research that estimated the size of the government’s subsidies for agriculture was at around 8 per cent of farm output in 2015-16, while public-sector investment in the sector continued to decline.

To address these, India introduced marketing reforms by implementing new laws — Farmers' Produce Trade and Commerce (Promotion and Facilitation) Act, 2020, and the Farmers (Empowerment and Protection) Agreement on Price Assurance and Farm Services Act, 2020 — that give freedom to farmers and traders to conduct intra or interstate trade of agricultural products. It also encourages contract farming with the goal to protect and empower farmers, so that they can engage with agri-business firms, processors, wholesalers, exporters or large retailers for farm services at mutually agreed prices, in a transparent manner, the report said.

Dear Reader,


Business Standard has always strived hard to provide up-to-date information and commentary on developments that are of interest to you and have wider political and economic implications for the country and the world. Your encouragement and constant feedback on how to improve our offering have only made our resolve and commitment to these ideals stronger. Even during these difficult times arising out of Covid-19, we continue to remain committed to keeping you informed and updated with credible news, authoritative views and incisive commentary on topical issues of relevance.
We, however, have a request.

As we battle the economic impact of the pandemic, we need your support even more, so that we can continue to offer you more quality content. Our subscription model has seen an encouraging response from many of you, who have subscribed to our online content. More subscription to our online content can only help us achieve the goals of offering you even better and more relevant content. We believe in free, fair and credible journalism. Your support through more subscriptions can help us practise the journalism to which we are committed.

Support quality journalism and subscribe to Business Standard.

Digital Editor

First Published: Thu, January 07 2021. 23:15 IST
RECOMMENDED FOR YOU
.