'MSP 50 percent more than agriculture produce's cost can distort market'

The Centre Friday told the Supreme Court it could not accept fixing the MSP for agricultural produce at least 50 percent "more than the cost of agricultural produce as it would distort the market and unsettle it".

"MSP (minimum support price) is recommended by CACP on objective criteria considering variety of relevant factors. Hence, prescribing an increase of at least 50 percent on cost may distort the market," the government told an apex court bench of Justice Sudhansu Jyoti Mukhopadhaya and Justice N.V. Ramana.

The Centre said this in response to a petition by a farmers' organisation Consortium of Indian Farmers Association to seek the implementation of the Oct 4, 2006 final report of the National Commission on Farmers.

The National Commission on Farmers, headed by eminent agriculture scientist M.S. Swaminathan, in its final report had said: "The Minimum Support Price (MSP) should be at least 50 percent more than the weighted average cost of production. The net take-home incomes of farmers should be comparable to those of civil servants...."

Seeking dismissal of the petition by the Consortium of Indian Farmers Association as it was devoid of merit, the Centre told the court that "a mechanical linkage between the MSP and cost of production may be counterproductive in some cases".

The government said the Commission on Agricultural Costs and Prices (CACP), while recommending MSP for 22 agricultural commodities and also the Fair and Remunerative Prices for sugar cane, takes into account a host of factors before deciding the MSP.

The factors that are taken into considerations by the CACP for recommending MSP include cost of production of agricultural produce, demand and supply, price trend in domestic and international markets, inter-crop price parity, terms of trade between agricultural and non-agricultural sectors, likely impact of MSPs on consumers, and the like. Besides, rational utilisation of natural resources like land water are also taken into account, the government told the court.

The court gave four weeks' time to petitioners Consortium of Indian Farmers Association to respond to the government's stand as it adjourned the hearing.