People's Democracy

(Weekly Organ of the Communist Party of India (Marxist)


No. 13

March  20, 2011

AIKS Demands Remunerative Prices for Kharif Crops


THE meeting of Commission on Agricultural Costs and Prices (CACP) was held on February 18 to consider and recommend the prices of the coming kharif crops. Noorul Huda and N K Shukla, both joint secretaries of the All India Kisan Sabha (AIKS), attended the meeting and presented a memorandum and certain proposals on behalf of the organisation.




In the meeting, the All India Kisan Sabha expressed serious concern and registered its dissent at the way the government has disregarded the suggestions put forward by it and even by the state governments regarding the minimum support prices (MSP) for the kharif crops. While the MSP announced are no way commensurate with the increasing costs of production, the government has sought to create an impression that the hike in MSP of certain crops (particularly pulses) is a manifold increase over the last year’s MSP and therefore quite remunerative for the farmers. Raising questions over this proposition, the AIKS pointed to certain issues to be taken into account.


First, far from meeting the consistent demands of farmers for remunerative prices, the government has indulged in a farce and refused to fix prices anywhere near the C2+50 per cent suggested by the National Commission on Farmers headed by Dr M S Swaminathan.




In its presentation, the AIKS also recalled what the National Commission on Farmers (NCF) had recommended in regard to MSP. It had said:


“The twin goals of ensuring justice to farmers in terms of a remunerative price for their produce, and to consumers in terms of a fair and affordable price for staples (65 per cent of consumers are also farmers) can be achieved through the following integrated strategy:


“1) The MSP and procurement operations are two separate initiatives and should be operated as such. The government needs to ensure that both the farmers (who also constitute the majority of consumers) and the urban consumers get a fair deal. Due care should be taken of the cost escalation after the announcement of the MSP in its operationalisation. The government should procure the staple grains needed for the public distribution system (PDS) at the price private traders are willing to pay to farmers. Thus, the procurement prices could be higher than the MSP and would reflect market conditions. The MSP needs to be protected in all the regions across the country.


“2) The food security basket should be widened to include the crops of the dry farming areas like bajra, jowar, ragi, minor millets and pulses. The PDS should include these nutritious cereals and pulses purchased at a reasonable MSP. This will be a win-win situation both for the dry-land farmer and the consumer. We will witness neither a second green revolution nor much progress in dry-land farming unless farmers get assured and remunerative prices for their produce.


“3) Both universal PDS and enforcing MSP throughout the country for the selected crops are essential for imparting dynamism to agriculture.”


In its presentation, the AIKS further said the CACP should be an autonomous statutory organisation with its primary mandate being to recommend remunerative prices for the principal agricultural commodities of both dry farming and irrigated areas. The MSP should be at least 50 per cent more than the weighted average cost of production. The “net take home income” of farmers should be comparable to those of civil servants. The CACP should become an important policy instrument for safeguarding the survival of farmers and farming. Suggestions for crop diversification should be preceded by assured market linkages. The membership of the CACP should include a few practising farmwomen and men. The terms of reference and status of the CACP need review and appropriate revision.




Adding that most of these recommendations are not being implemented by the UPA government, the AIKS said public procurement continues to remain limited to a few major crops and procurement operations are carried out only in limited parts of the country. Bulk of the small peasants do not benefit from public procurement. The MSP scheme excludes important crops like chilly, areca nut, spices, castor, other oilseeds, aromatics, cash crops, traditional staples etc, thereby leaving their producers at the mercy of private traders. Strengthening and expanding public procurement remains to be a major issue before the Kisan Sabha.


Timely procurement is also a major issue. The delay in procurement and inability to procure sufficient quantity has often forced the cultivators to sell their produce at low prices to private traders to meet their day to day expenses as well as to meet the requirement of initial investment for the next season. The Kisan Sabha has demanded that the Food Corporation of India (FCI) as well as other governmental agencies involved with procurement should stay and involve with procurement for a longer period. Timely procurement should be complemented by an adequate storage mechanism so that market prices do not fall below the MSP. There is hence a need for augmentation of storage facilities.


The only effective way to ensure food security and providing genuine relief to the people against price rise and inflation is to reintroduce the universal PDS and bring about a massive expansion of PDS outlets. Moreover, besides foodgrains, sugar, pulses and edible oils should be supplied through the PDS in cheap rates.


Besides universalisation of the PDS, the following steps need to be taken by the government to check price rise and inflation:


1) A coordinated countrywide crackdown on hoarding of essential commodities should be launched. Disclosure of stocks of essential commodities by private traders, especially the big corporates, should be made mandatory across the country.

2) Futures trading on essential commodities including foodgrains like wheat, paddy, sugar, potato and pulses should be banned.

3) Prices of diesel and petrol should be brought down by cutting excise duties.




In the past, the union government announced statutory minimum price (SMP) for purchase of sugarcane by sugar mills. The major sugar growing states, in view of specific conditions, announced a state advisory price (SAP), which was usually substantially higher than the SMP. The union government also announced a levy price for purchase of levy sugar from sugar mills for the purpose of public distribution. This levy price was determined on the basis of SMP.


But the union government brought the Essential Commodities (Amendment and Validation) Ordinance last year, later passed as a bill in the winter session of parliament, through which the government sought to bring about changes in sugarcane pricing to the detriment of the farmers. The bill sought to replace the statutory minimum price (SMP) with a new category called fair and remunerative price (FRP). The union government first argued that if states announced an SAP over and above FRP, they would be required to pay for the difference in levy price on account of the higher SAP. Though the central government later agreed to give the right to states to announce a SAP after massive protest from farmers, the confusion continues. A number of sugar mills went to court and consequently the farmers are made to suffer.


In view of this, the Kisan Sabha has demanded that the system of announcing SAP by the states should be restored and the central government should ensure that the additional burden of levy on account of SAP is borne by the sugar mills and not by sugarcane farmers.


Through its memorandum, the AIKS raised the following demands in the interests of Indian peasantry.


1) Widen crop basket under the purview of the CACP: Include important crops like coarse cereals (jowar, bajra etc), chilly, potato, areca nut, spices, oilseeds, jute, dry fruits, aromatics, cash crops, traditional staples, horticultural crops etc under the purview of the CACP. Ensure remunerative MSP and effective procurement of minor forest produce, dairy products, poultry and fisheries.


2) Ensure stable and remunerative prices with effective procurement: Implement Dr Swaminathan commission recommendation of C2+50 per cent for computing MSP as the base price. Set up a price stabilisation fund to protect farmers from volatile world market prices.


3) Ensure timely fixation of MSP and expand public procurement operations. It must be made mandatory for the government to announce the MSP well before the sowing season. The Food Corporation of India as well as other governmental agencies involved with procurement should stay and involve with procurement for a longer period. Expand the public procurement mechanism across the country and ensure mobile procurement units in far-flung areas. Allow procurement through panchayats and state corporations and provide incentives to encourage such efforts.


4) Provide incentives for production. Guarantee subsidised inputs of a superior quality and provide production bonuses.


5) Strengthen public distribution system. Complement an effective procurement mechanism by a universal public distribution system, which is a must if the farmers have to be led out of the present crisis.


6) Augment storage facilities. Ensure adequate storage mechanism to ward off problems arising out of erratic climatic conditions. Ensure modern storage facilities and also cold storage facilities.


7) Restore quantitative restrictions and ensure effective protection from imports. The unrestricted import of agricultural products under the free-trade regime is hitting the farmers growing commercial crops like coconut, oilseeds, tea, coffee and spices. Impose restrictions on such imports.


The AIKS memorandum also reiterated the organisation’s opposition to free trade agreements (FTA) with ASEAN countries, European Union and Israel as our country is characterised by low levels of productivity as well as exorbitant costs of cultivation. The AIKS said this would make it near impossible for our farmers to compete against the cheap imports.


8) Regulate markets and speculative trading. Ban all futures trading in agricultural products. Regulate mandis and markets to stop the exploitation of farmers. Encourage farmers’ cooperatives and revamp commodity boards and marketing boards. Curb middlemen by directly procuring from farmers. Check hoarding and black-marketing.


9) Develop agro-based industries. Promote jute, cotton, coconut and rubber-based products. Ensure value addition for minor forest produce as well.


10) Clear the arrears of sugarcane farmers. Sugar mills are accumulating huge arrears in payment to farmers. Make them pay the arrears with interest before the next crushing season.


The table alongside gives the procurement prices of various crops demanded by the AIKS for the next fiscal year as against what the government paid during the outgoing fiscal.



MSP for 2010-11 and AIKS Proposals for 2011-12




MSP 2010-11

MSP proposed by AIKS  for 2011-12






Grade A























Arhar (Tur)













Medium Staple




Long Staple




In Shell