Budget 2025: Will govt accept farmer demands for assured procurement?

Agriculture Minister Shivraj Singh Chouhan will resume talks with protesting farmers next month to resolved procurement and Minimum Support Price issues

A few days after the Union Budget 2025, the Central government will resume stalled talks with farmers’ groups on securing the Minimum Support Price (MSP), an assurance that it has given fasting farmer leader Jagjit Singh Dallewal. 

 

Dallewal, who was sitting on a fast-unto-death on the borders of Punjab and Haryana, agreed to accept medical help after a top-ranking union government official assured him that talks will resume from February 14. 

 

He is part of the two off-shoot groups of Samyukta Kisan Morcha (SKM), called the SKM (apolitical) and Kisan Mazdoor Morcha (KMM). 

 

SKM was a conglomeration of more than 100 farmers’ groups that spearheaded the year-long farm agitation in Delhi borders against the now repealed three farm laws. 

 

Last year, talks with this breakaway SKM faction broke down around the same time that its leaders rejected the Centre’s offer for 100 per cent assured buying of five crops at MSP, on the condition that farmers moved out of paddy and wheat cultivation. 

 

The offer for talks was made after farmers were once again stopped from marching on Delhi, leading to clashes with the police on Haryana-Punjab borders. 

 

During the talks, the Centre was represented by a team of union ministers that included Commerce Minister Piyush Goyal, while the farmers’ side was led by their representatives. Officials of the Punjab government were also part of the discussions.  

 

Unlike 2020, the 2024 talks were held in Chandigarh with the Punjab government as mediator. The earlier round of negotiations with the current group of agitators were led by Arjun Munda. Next month’s talks will be under the leadership of new Agriculture Minister Shivraj Singh Chouhan, who has shown interest in meeting with all farmers’ groups and has been responsive to their demands. 

 

The Centre’s proposal 

 

In an effort to break the deadlock, the Centre in February 2024 proposed to purchase the entire output of masoor, urad, arhar (all pulses), maize, and cotton over the next five years at their MSP. Experts such as eminent agriculture economist and NITI Aayog member Ramesh Chand had then termed the proposal as ‘path breaking’. 

 

Chand had told Business Standard that cotton and maize with assured MSP have the potential to become alternatives to paddy in some areas. Cotton, particularly in south-west Punjab, would be a great move, he had said. 

 

For pulses, which are beneficial for the soil, India needs to have better yield along with MSP to compete with paddy, he said. “Attractiveness of pulses will rise if their environment contributions are internalised,” Chand had said at the time. 

 

Just months before the talks, Home Minister Amit Shah had launched a national portal called ‘e-Samriddhi’ through which farmers could sell their tur produce at MSP or even market prices. 

 

Shah had then said that a similar facility would be extended to some other crops as well. 

 

Procurement of pulses of farmers registered in the portal will be done by cooperative majors National Agricultural Cooperative Marketing Federation of India Ltd (Nafed) and the National Cooperative Consumers' Federation of India (NCCF). 

 

These are both central nodal agencies that undertake procurement on behalf of the government for maintaining a buffer stock under the Price Stabilization Fund (PSF). They also buy under the Price Support Scheme when the rates fall below MSP.  

 

Chouhan, too, has on numerous occasions said that the Centre is committed to purchase 100 per cent of pulses and oilseeds at MSP from farmers who register on the e-Samriddhi portal. 

 

In fact, in the just-concluded kharif sowing season, the Central government through its agencies had procured around 1.4 million tonnes of soybean – the highest-ever such purchase – at MSP from farmers after prices dropped to record lows. 

 

Some reports said that the government will once again try to revive the proposal for assured purchases for five pulses and also try to convince the growers and the Punjab government on its new draft policy on agricultural marketing. 

 

Farmers demand and budget 

 

The Budget2025 that will be placed in Parliament just a few days from now does give the Central government another chance to take a step towards ensuring MSP. 

 

By increasing the food subsidy bill, it can signal continuation of its annual purchases of wheat and rice. Alternatively, the Budget could also announce a roadmap for assured procurement of pulses and oilseed through creation of revolving funds to help states, as some reports have suggested. 

 

Sources said another big jump in Pradhan Mantri Annadaata Aay Sanrakshan Abhiyan (PM-AASHA) – loosely translated as Prime Minister’s Farmers Income Guarantee Campaign – allocation could also be undertaken to further emphasise the government’s commitment to assured procurement. 

 

Last year, the Union cabinet in a significant move expanded the ambit of PM-AASHA by converging the Price Stabilisation Fund (PSF), Price Support Scheme (PSS), and Market Intervention Scheme for perishable crops (MIS) into the programme, along with the existing Price Deficit Payment Scheme (PDPS). 

 

Before, this PSF was operated by the Department of Consumer Affairs. Its budget was boosted by Rs 10,000 crore in the Budget2024.  

 

That apart, under the PSS, the procurement of notified pulses, oilseeds, and copra at MSP will be 25 percent of national production from 2024-25 season onwards. The Centre also renewed and enhanced the existing government guarantee to Rs 45,000 crore for procurement of notified pulses, oilseeds, and copra at MSP. 

 

However, the Union Cabinet laid down that the ceiling of 25 per cent procurement would not apply to tur, urad, and masur for the 2024-25 season, as there would be 100 per cent procurement of these during the 2024-25 season. In other words, the government was willing to purchase all the production of tur, urad and masoor for 2024-25 season, which is similar to what was promised to farmers in the February 2024 meeting in Chandigarh.  

 

To encourage states to come forward for implementation of the Price Deficit Payment Scheme (PDPS), similar to the ‘Bhawantan Bhugtan Yojana’ earlier launched by the Madhya Pradesh government, the coverage of notified oilseeds was also enhanced from the existing 25 per cent of state production to 40 per cent. 

 

Under MIS, for commodities such as onion and potatoes, the Government also increased the coverage from 20 per cent to 25 per cent of production, and added a new option of making differential payment directly into the farmers' account instead of physical procurement. 

 

However, a pilot programme on a private procurement scheme that sought to involve private players in procurement of key agricultural commodities was discontinued for lack of response. 

 

Between the last round of negotiations with farmers and the latest one after almost a year, the Centre has moved some steps towards ensuring MSP. Whether the Union Budget 2025 will strengthen those measures further will be known in the next few days.