Farmers protest for MSP

Farmers are protesting  on the streets once again and this time their biggest demand is MSP. 

What is MSP? 

 The minimum price set by the government for any agriculture products, at which the products would directly  brought from the farmers if the open market prices are less than the cost incurred. 

In India, MSP is issued by Commission

for Agriculture and Prices (CACP). 

It is a decentralised agency established in 1965,today it functions under the ministry  of agriculture and farmers welfare. 

 

Suppose you buy a 100gram packet of sweet corn  in Rs 25 it means 1 kg sweet corn is of Rs 250.

Now ,how much does a farmer get out of this Rs 250 ? 

If MSP applied,then farmer will get Rs 21/kg.

Even after implementing MSP, the farmer will get only this amount. 

That is, the middleman will still keep about

Rs 230 out of it. 

How should the MSP be ? 

In 2002, a committee was formed as High level committee on long term grain policy

head by economist Abhijit Sen. 

This committee said MSP should be based on C2  cost of production. 

To understand C2, first we need to know about A2 and FL costs. 

A2 cost- All paid out cost directly incurred by the farmers. 

FL cost- FL or Family labour cost  is the estimated value of Unpaid family labour means when a farmer works in his field, often his family members help him in farming. Because his family members giving their own time in helping him, so there should be labour cost for them too. They missed the opportunity to do another work. 

Today, CACP takes 1.5 times of A2+FL cost to decide MSP. 

   

C2 cost- C2 cost refers to comprehensive cost. In C2 cost ,not only do we take the A2 and FL costs but we consider the cost of owned capital and Rental Value  of land. 

Is it wrong for the farmer to get even this minimum price?