Context: The Delhi government has decided to introduce Minimum Support Price (MSP) for farmers based on the report of the MS Swaminathan Commission.

Background:

A three-member committee was formed in December to study the MS Swaminathan Commission’s report. The committee has submitted its report. The report will be put before experts for suggestions. Once the MSP is finalised, the government will hold meetings with farmers, seeking their views and thereafter it will be sent to the Cabinet.

The Swaminathan Commission- Inception:

The National Commission on Farmers (NCF), with MS Swaminathan as its chairman, was formed in 2004.

Aim: To come up with a system for sustainability in farming system and make it more profitable and cost competitive in farm commodities. To also recommend measures for credit and other marketing steps.

The commission submitted five reports between December 2004 and October 2006. The fifth and final report is considered the most crucial as it contains suggestions for the agriculture sector as a whole.

The Commission’s observations:

• Farmers need an assured access to and control over basic resources of farming. These include land, water, fertilizers and pesticides, credit and crop insurance. Knowledge of farming technology and markets is also key.
• Farmers’ concerns and other agriculture-related issues must be implemented in the concurrent list, to make it a high priority for both state and central governments.

Key recommendations of the Commission:

• Distribute ceiling-surplus and wasteland among farmers, prevent the non-agricultural use of farmland, secure grazing rights and seasonal forest access to forest tribals.
• Establish a National Land Use Advisory Service, which would link land use decisions with ecological and marketing factors of season and geography-specific basis.
• Reform irrigation resources and its distribution among farmers. Use rainwater harvesting, water level recharging to increase water supply.
• Spread outreach of institutional credit by reducing crop loan interest rates, provide a moratorium on debt recovery, agricultural risk fund and a separate Kisan Credit Card for women farmers.
• To address the growing farmer suicides, provide affordable health insurance at primary health centres in rural areas. The recommendations included an extension of national rural health mission to suicide-prone areas. Restructuring of microfinance policies, covering all crops by insurance and social security net for support were also sought.
• Give farmers a minimum support price at 50% profit above the cost of production classified as C2 by the Commission for Agricultural Costs and Prices (CACP).

WHAT IS C2?

The CACP defines production costs of crops under three categories — A2, A2+FL (standing for family labour) and C2.

• A2 is the actual paid-out expenses incurred by farmers — in cash and kind — on seeds, fertilisers, pesticides, hired labour, fuel, irrigation and other inputs from outside.
• A2+FL includes A2 cost plus an imputed value of unpaid family labour.
• C2 is the most comprehensive definition of production cost of crops as it also accounts for the rentals or interest loans, owned land and fixed capital assets over and above A2+FL.