How decrease and increase in MSP affect the food grains products
Answers
Historically, whenever MSP has been increased for an agricultural commodity, their prices went up, adding to inflation.
Having said that, increasing MSP will facilitate greater self sufficiency of Indian economy for various agricultural products. Also, the food processing sector will benefit from greater availability of the products, for processing for domestic consumption as well as for exports.
On an even note, proper implementation of increase in MSP, in line with some margin over the cost of production is critical. But the problem arises due to deplorably low yield on crops in Indian soil compared to many advanced countries, and the wide variance in yield within the country.
There are significant challenges in determining the cost of cultivation, which can vary widely depending upon (a) soil (b) climatic conditions (c) rainfall (d) level of irrigation (e) crop cultivated (f) pest and insect attacks and the frequency and extent thereof (g) extent of use of fertilisers and pesticides (h) use of hybrid seeds / genetically modified seeds (i) timely sowing, replanting and monitoring of the crops (j) extent of mechanisation of agriculture (k) post harvest mechanisation and marketing (l) contract farming (m) low size of farm land, making it sub optimal to mechanise (n) wide fluctuations in market price, depending on the arrivals in the local markets, as well as global scenario, which changes dynamically (o) lack of adequate post harvest preservation / processing (p) the middle man (could be series of middle men, not just one) eating a lion’s share of the consumer’s pie with only a portion shared with the farmers (q) lack of timely and adequate availability of loans, seed, fertilizers at an appropriate cost, forcing the farmers to depend on middle men for each of these etc
☺☺