Context: The Cabinet Committee on Economic Affairs, chaired by Prime Minister Narendra Modi, on Wednesday has approved the increase in the Minimum Support Prices (MSPs) for all mandated kharif crops for marketing season 2021-22. 

Key Points

• The decision was taken by the Cabinet Committee on Economic Affairs.
• It is about 4% higher than last year’s price.
• The Centre said the higher rate of returns being promised for urad, tur and oilseeds was a deliberate policy move.
• The differential remuneration is aimed at encouraging crop diversification.
• Concerted efforts were made over the last few years to realign the MSPs in favour of oilseeds, pulses and coarse cereals.
• This was to encourage farmers to shift to larger area under these crops and adopt the best technologies and farm practices, to correct the demand-supply imbalance.
• Added focus on nutri-rich nutri-cereals is to incentivise its production in the areas where rice-wheat cannot be grown without long term adverse implications for groundwater table.

What is Minimum Support Price?

• The MSP is the rate at which the government purchases crops from farmers, and is based on a calculation of at least one-and-a-half times the cost of production incurred by the farmers.
• It is a form of government intervention to insure the farmers against a steep decline in the prices of their goods and to help them prevent losses.
• The Cabinet Committee of Economic Affairs announces MSP for various crops at the beginning of each sowing season based on the recommendations of the Commission for Agricultural Costs and Prices (CACP).
• The CACP takes into account demand and supply, the cost of production and price trends in the market among other things when fixing MSPs.
• The government reports the MSP towards the beginning of both cropping seasons i.e. Rabi and Kharif.

Ongoing ?Issue

• Farmers are upset with the three farm bills passed by the government, with one of the reasons being that none of them mentions anything about MSP.
• While the government does declare the MSP twice a year, there is no law that makes MSP mandatory. 
• The protesters have been asking for a statutory entitlement for all farmers so that a remunerative MSP can be ensured for all farmers.
• The farmers want the government to guarantee an MSP when they will be dealing with private players.

Issues faced by agriculture sector:

• Low crop yields
• Dependence on monsoon
• Low share in global markets
• Indebtedness and farmer suicides

Possible Solutions to These Problems
Multiple Crops

• For better yield and profitable results, farmers are advised to cultivate multiple crops, including Apple, Pineapple, Papaya, Banana, Coconut, Ginger, Turmeric, and many others.

Farmers’ Education is Vital

• Many farmers are unaware of crop rotation. Education is pretty much improved in urban areas, but the govt has overlooked the need for the same in rural areas, particularly in the overall agriculture sector. This is the reason why farmers remain unaware of several government-provided schemes and their benefits.

Modernisation in Agriculture

• If we encourage youth for farming and related occupation, this sector will definitely boom. They already have basic institutional education and knowledge; they can learn and grow quickly. For instance, almost all of them have smartphones; by using a modern agriculture app, they can perform well in farms.
• Besides, introducing modern technology and passing advanced equipment to small farmers will help boost efficiency, productivity, and quality.

The Requirement for Crop Insurance

• Crop insurance is essential but easy, quick settlement of claims is vital. There’s a need for transparent index-based insurance that treats policyholders equally within a defined geographical area. Index-based insurance system has low operational and transnational costs and ensures quicker payouts.

Better Water Management

• Water resources can be fully utilised through interstate coordination on water management; water can easily be delivered to the areas where it is most required. Connecting the rivers and constructing national waterways/channels will solve water supply problems and improve irrigation facility, helping farmers in case monsoon fails.

Road Ahead

• India has 100 million tonnes of stockpile of grains, we have to change our crop mix and cropping patterns. We also need to put changes in policies like Input support, stock open procurement and make a distinction between rich and poor and not take them under the same basket for the government schemes. We need to for-clawed an agro climatic crop pattern, focus on high value crop and moves away from wheat and grains that having been said while undertaking all these reforms the farmers apprehension must also be look into, just by increasing or decreasin MSPs we are not going to get desired result. We need multi- faceted approach innovations and technologies are also important. If all this is done some tough measures are taken, we can indeed see true agriculture reforms.