Concerns that the gains from the increase in minimum support prices will be washed away by the effects of El Nino

How effective measures such as export controls and stock limits remain is a matter of debate

To increase the income of the farmers in the country, the government provides various forms of relief to them and the Minimum Support Price (MSP) is also announced every year for agricultural crops. Since the independence of the country, there have been many attempts to increase the income of the farmers, although there is no significant change in the condition of the Bhumiputras, it can be said from the election promises made by the political parties for the farmers. The support price policy may have increased farmers' income but the high rate of inflation against the support price has made the situation dire for farmers. The government has recently announced support prices for the current year's kharif crop. The price has been increased higher than usual in terms of percentage. Amid the threat of El Nino, the government seems to have tried to protect farmers and voters by increasing support prices in view of the assembly elections in five states at the end of the current year. Compared to last year, the prices have been increased by five to ten percent.

However, there is a possibility of El Nino affecting the agriculture sector in the current year. In such a situation, there is also a question as to how much the increase in support prices will increase the income of the farmers. If the income of the farmers does not increase, then naturally the rural demand will not be affected. The government takes into account the cost of sowing the crop while fixing the support price, but whether the support price is adequate compared to the cost has always been a matter of debate. If we consider the recent situation, not only the prices of fuel are seen to be continuously high, the prices of fertilizers and pesticides have also gone up. The cost of animal feed has also increased. In such a situation there is doubt about the actual increase in income through agriculture. Due to insufficient increase in income, farmers are unable to reduce their indebtedness as expected and the situation remains the same or worsens.

Support prices are announced for 23 crops including Kharif and Ravi, but only wheat and rice are purchased at support prices. Procurement of other crops remains limited to certain areas. Rice and wheat can be bought at higher support prices as buffer stocks of wheat and rice have to be maintained under the National Food Security Act. Looking at the procurement figures of recent years, it seems that the government has sometimes been forced to buy more than required.

Despite the fact that the government is well aware of the huge burden on the country's economy in providing support to farmers, it has become a norm for political parties to keep making popular announcements besides support prices for farmers. Despite increasing the support price of agricultural products, many times the market price of agricultural goods is seen to be quoted at a discount of 25 to 30 percent from the support price. Except for wheat and rice, government agencies buy agricultural products at subsidized prices, but these purchases are in such small quantities that even farmers do not have much enthusiasm to sell goods to agencies.

Encouraging farmers to diversify crops is a policy in the right direction but it is necessary to create a remunerative price environment. If the farmers really want to divert to different crops, the government will have to diversify the purchase at the support price so that the farmers will be assured that their hard work will not fail and they will get a respectable return for their hard work and the government can also see a positive result of the exercise of announcing the support price.

The possibility of El Nino is high in the current year and its impact will be known only in the next four months. Despite El Nino conditions in the past, the country has seen normal monsoons. But in case of El Nino, if the monsoon is weak, then the agricultural sector may be affected and the crop production may also remain low. It is true that in the event of low crop production, prices of foodgrains go up in the open market, but higher support prices mean nothing to farmers where the crop itself has been damaged. With the increase in support prices, it is the need of the hour to prepare a contingency plan for agricultural areas in monsoon dependent areas.

To ensure that there is no unnecessary surge in the price of pulses in the country and its hoarding, the government has recently imposed stock limits for wheat and some pulses in addition to export controls on some agricultural commodities. Implementation of this stock limit is expected to reduce prices. However, it remains the responsibility of the government to see that the benefit of this reduction does not go to the consumers at the expense of the farmers. There does not appear to be any practicality in the policy of enforcing a stock limit for wheat while there is a claim of adequate supply on the one hand. While the ravi selling season is not yet over and farmers especially in the northern states are believed to have stocks of wheat, there is no doubt that the implementation of stock limit in such a situation will slow down the offtake from farmers. While it is a matter of church how much the consequences of measures like export controls and stock limits are truly helped, practical decisions in standards for them may benefit farmers more than politically motivated ones.