Why in news?

• The Kerala government, in response to the demands of the fishing community in the state, introduced a minimum support price for fisherfolk’s catch in April 2018.

What is the case for MSP in Kerala?

• Demand–supply imbalance: There have been a number of recent studies that highlight the imminent resource crisis in Indian fisheries, attributed to overfishing, juvenile fishing and other destructive fishing practices.

• The demand–supply gap is widening continuously despite growth in aquaculture production year after year.

• There is a deficit of about 2 lakh MT of fish, especially with respect to sardine and mackerel, which are currently imported from other states.

• Thus it’s doubtful that a policy instrument like MSP , be successful against such outlooks where market demand outweighs the supply in foreseeable future.

• False signals to catalyse resource depletion: Apart from the seasonal fishing ban, a few input-specific controls and spatial controls, many of which exist only for namesake, fishing in India lacks serious.

• There is no effective output-specific controls such as individual catch quota, collective catch quota or vessel catch limits as in the western waters to exercise strict control on the level of harvests.

• The recently introduced minimum legal size (MLS) regulation in Kerala has only been partially effective to check juvenile fishing so far.

• Therefore, prior to introducing MSP, we need to find reliable answers for whether there would be high chances of transmitting false price signals that may further exacerbate resource position.

• Systemic rigidities in the value chain: One of the primary arguments for MSP in the fisheries sector is that the share of fisherfolk in consumer’s rupee is low.

• This has been said to be the result of excessive exploitation of fisherfolk by auctioneer middlemen who pocket a considerable part of the marketing margins in return for credit.

• However, this is a systemic issue that cannot be addressed through a price support mechanism like MSP.

What are the practical problems in implementation?

• To be effective, the government should be able to procure all the quantity of  fish that is offered by the fishers at MSP, for which the capacity of cold storage required would be enormous.

• Also procurement should take place on a regular basis.

• This also requires sufficient back-up in the form of regular offtakes which may involve huge subsidies.

What are the possible alternatives?

• A better measure would be to announce a price stabilisation fund through which the state can undertake ad hoc initiatives to intervene in the market.

• The market intervention scheme (MIS) presently in operation for perishable horticultural commodities, is another suitable alternative to MSP.

• The state with the support from cooperatives can undertake procurement activities on an ad hoc basis during instances when prices fall below normal.

• The advantage is that such mechanisms do not necessitate any permanent establishments.

• Another pragmatic option is to provide the right of fixing landing price to fisher cooperatives as being practised in Japan and Norway.

• Coupled with these, comprehensive packages such as improving landing centre infrastructure, strengthening cold chains, reefer systems, retail  chains and value addition through product diversification are needed.

• The institutional lending systems should be strengthened, procedures simplified and flexibility augmented in credit contract conditionality to improve financial inclusion in the fishery economy.