People's Democracy

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


No. 26

June 26, 2011




Is CACP Committed to Ensure Remunerative Prices


ON behalf of the All India Kisan Sabha (AIKS), its finance secretary Noorul Huda and joint secretary Vijoo Krishnan attended the meeting of the Commission on Agricultural Costs and Prices (CACP) that was called at Krishi Bhavan on June 15, to discuss the issue of minimum support prices (MSP) of rabi crops, 2011-12. On the day, the Kisan Sabha submitted to the chairperson of the CACP a note containing its proposals for the MSP of the coming rabi crops.


The AIKS note pointed out that the CACP has been carrying out the exercise of consultation with peasant organisations and state governments for fixing the minimum support prices of rabi crops and kharif crops annually. This consultation for fixing the MSP of rabi crops 2011-12 is taking place in the immediate aftermath of the announcement of MSP for the kharif crops. But the AIKS has expressed its displeasure with the manner in which the central government has come up with the announcement of the MSP for kharif crops for 2011-12. (See People’s Democracy, June 19 issue.) The announcement has been made without taking into consideration the suggestions of the AIKS and other representatives of the farming community placed before the CACP.


The AIKS also stressed the fact that the MSP announced by the Cabinet Committee on Economic Affairs (CCEA) is far below the expectations of the peasantry and provides no incentive for continued engagement with cultivation. The government has, for the second year in succession, asserted that some of the prices fixed were even higher than the CACP recommendations. This raises serious doubts about the commitment of the CACP towards ensuring remunerative prices. The imperative is upon the CACP to dispel doubts and come up with realistic pricing that will provide farmers with the incentive and the investible surplus to carry on with cultivation.


The AIKS has made the following submissions regarding the MSP for rabi crops 2011-12:


1) The chairperson of the CACP, had in the last meeting, assured to look into the AIKS proposal for arriving at a consensus on calculation of the cost of production and had agreed to recommend to the union agriculture ministry that it must have a consultation with the state governments, experts and peasant organisations for setting at rest the discrepancies in cost calculations. However, no follow-up action has been taken in this regard. Immediate steps have to be taken to rectify the anomalies in cost calculations.


2) Ever since the decontrol of fertiliser prices under the nutrient based subsidy (NBS) regime, the prices of DAP, MoP and other fertilisers as well as of urea, which has been partially decontrolled have been increasing. The prices of urea, DAP, MoP and the like, have risen by more than 10 per cent. Now, with the import price parity and fertiliser companies determining the farm-gate prices, farmers are going to be entirely at the mercy of profit-seeking fertiliser cartels. The volatile oil prices and increases in the prices of petrol and diesel are also an added burden on the farmers. The CACP will, therefore, have to keep note of this extraordinary situation in fertiliser prices as well as fuel prices other than the increase in costs of other inputs while determining the MSP.


3) We have to be prepared with a contingency plan for the rabi season in the event of lesser than normal rainfall. This will increase the irrigation costs. Shortage of DAP, which is a crucial fertiliser, during the sowing season as well as other fertilisers and absence of proper delivery mechanism forces the farmers to buy DAP, urea and other fertilisers from the black market. In states like Orissa, for instance, the farmers are forced to pay double the original price for each bag of urea. Due to the decontrol of fertiliser prices, the cost of production this year will be very high. Interest free loans, subsidised diesel, provision of rent-free pump sets and tractors through the panchayats to encourage group cultivation, and supply of quality inputs at affordable rates must be ensured to deal with any such eventuality.


4) When compared to huge increases in input costs, it is to be noted that the MSP of wheat in 2010-11 had been fixed at merely Rs 1,120 per quintal which was an increase of a paltry Rs 20 or 1.8 per cent over the 2009-10 MSP. When seen in the context of an earlier decision of the government to buy wheat from the Cargill International at Rs 16,250 a tonne, which would mean Rs 1,625 per quintal, we can understand how low our farmers are being paid while the corporate sector corners super profits. Therefore the AIKS has reiterated that in the light of the increase in the input costs the MSP for wheat should be fixed at Rs 1,700 per quintal (Rs 1,500 + production incentive of Rs 200 per quintal).


5) The AIKS had collected the costs of production for sugarcane in Tamilnadu, Andhra Pradesh, Karnataka and Uttar Pradesh (East and West). If the MSP is calculated on the basis of the Swaminathan commission recommendations, then at the given costs they would range between the lowest of Rs 284.4per quintal to the highest of Rs 367.50 per quintal if Western UP costs are taken into account. This was based on the calculation a year ago. The AIKS note has expressed hope that the CACP would take note of this fact and fix the prices commensurately. The organisation has demanded that in no case should it be below Rs 300 per quintal.


6) The case of jute farmers in the country is pathetic and the low MSP announced from time to time has only added to their miseries. There has to be effective steps to relieve the jute farmers from the condition of extreme distress. Quantitative restrictions must be reinstated to curtail import of cheap substitutes for coconut, groundnut and other locally produced oilseeds. Special assistance to fight the mite menace in coconut and for phased removal of senile palms having low productivity must be ensured.


7) The farmers are cultivating mustard, rapeseed, safflower and masur under high risk conditions. The market rates of these crops are many times higher and the middlemen and traders are raking in huge profits. The middlemen and big traders control the dynamics of the local mandis, making it impossible for farmers to get a fair deal. There has to be stringent regulation of activities of such elements and the announcement of MSP should be followed with effective procurement.


8) Immediate steps to ameliorate the soil condition and replenish it with provision of gypsum and also other sources of nutrients in the rabi season, especially for rabi oilseeds and pulses must be ensured at subsidised rates. Similarly, inputs and technology needed to correct acidity, alkalinity and salinity, and also the drip irrigation mechanism at affordable rates to ensure better water management where possible, must also be provided.


9) The mechanism of MSP 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. There has to be urgent efforts to widen the crop basket under the purview of CACP and procurement of the same should be taken up. Minor forest produce must be procured at remunerative prices from the tribals as it is their main source of livelihood, and avenues for value addition must be ensured. Compensation for losses in income due to natural calamities like floods or droughts must be ensured.


The AIKS has expressed the hope that the CACP would consider its proposals favourably while fixing the MSP for the coming rabi crops.

AIKS Proposals for MSP of Rabi Crops, 2011-12



MSP Approved for 2010-11 (Rs per Quintal)






MSP Proposed by AIKS for










Rabi Crops
















Lentil (Masur)





Rapeseed/   Mustard















Other  Crops

Jute (Common)





Jute (Superior)










Copra (Ball)





Copra (Milling)