More than one loan waiver, which groups of Protestant farmers in several states required is the establishment of a report drawn up in 2006 by a committee headed by scientific scientist MS Swaminathan. The main recommendation of the committee was to set the minimum support price for agricultural products at 50% of the benefits in the farmer’s cost of production.
A minimum support price is government intervention to protect farmers against sudden falls in market prices. This is the speed at which the government buys agricultural products when there are no other buyers in the market.
On the surface, the formula of the commission of a Swaminathan higher minimum guarantee prices based on the cost of production would strengthen the safety net for farmers.
But a closer look shows that it would have a limited impact because the support of the minimum price mechanism is broken. Here is why.
The central government said a minimum support price for 25 crops, including key grains, legumes, oilseeds and cotton, jute, coconuts and sugarcane. But the most visible offer in the minimum price support mechanism is for both cereals: wheat and rice. The Center purchases large quantities of farmers to fulfill their obligations under the National Food Safety Act. According to the law, the Center must assume the cost of providing 75 per cent of India’s rural population with five kilograms of grain per month at highly subsidized prices sold in the public distribution system.
In order to acquire wheat and rice, the Indian Food Corporation and the Indian National Federation of Marketing Federation, financed by the Center, accountants have been established in the main agricultural markets throughout the country. Estimates of June 22, the government bought 23% of wheat produced in the country and 35% of rice in 2016-17.
The supply of the other 23 cultures is more summary. For most, the Center does not regularly carry out these crops. For example, in October 2016, the Center has instructed its procurement agencies to purchase soybean producers for the first time in several years, according to the business standard. There are other designated organizations that could use the mechanism to obtain cash crops, such as the cotton Corporation of India, which carries out a variable amount each year.
In total, less than 5.8% of agricultural households in India are able to sell their products to the government, a high-level committee in January 2015 to report on the restructuring of the Indian Food Corporation has been found .
Although the Center supports the supply of wheat and rice, if States want to ensure that their farmers can have access to the minimum support prices for other crops, they must use their own funds. They can also declare a premium above the minimum central support price to encourage farmers to grow more than one crop. Maharashtra, for example, offers a bonus of 500 rupees per quintal for turdal, above the price declared in April 5050.
But states at risk of cash rarely are able to get crops, much less to advertise bonuses.
In Assam, for example, there is minimal support pricing mechanism almost entirely on paper. Few farmers are aware of its existence. According to a senior official of the Assam Agriculture Marketing Board, the agency charged by the state government for the purchase of farmers’ products at a minimum support price, the purchasing power of the board is severely limited by the lack of funds .