Increased MSP has acted as a bane to the sustainability of the agricultural development. explain
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This year, monsoon had a staggered start. Last year, too, the monsoon was anything but normal, and not surprisingly, farmers did not gain from an erratic monsoon. This is evident from the fact that 34 major farmer protests have been recorded across 15 states since 2017. Farmers took to streets, demanding a fair price for their produce and a guarantee of assured income.
In the coming week, the Centre will announce minimum support prices (MSPs) of 23 crops for the kharif season. The MSP will be 1.5 times of farmers' investment, Prime Minister Narendra Modi said in his nation-wide interaction with the farmers recently. In the last budget, Centre pledged to boost farmers’ returns by increasing government’s purchase prices for crops by more than 50 per cent of the output cost.
Even as farmers question the methodology behind the calculation of MSPs, which, according to them, does not cover the entire input cost, they are already bearing the burden of increased input cost. Here is a low-down on how increasing input prices will diminish the gains of MSP in the kharif season.
Fuel prices: 25 per cent additional burden on paddy farmers
Fuel prices, which recorded a consistent increase in May and June this year, added to farmers’ woes. They are already suffering the brunt of low prices for their products across the country. According to experts, the share of fuel in the cost of cultivation per acre is between 10 per cent and 25 per cent and the rise in diesel price will certainly increase the input cost of paddy and other crops. Rice is a major kharif crop grown in Punjab, where farmers will have to bear at least 25 per cent spike in their input cost this year. According to a news report, the Punjab farmers will witness a spike of Rs 1,000 per acre in paddy input cost as diesel rates went up
20 per cent projected increase in rental cost of farm equipment and operations
According to the Economic Survey 2018, use of improved implements has the potential to increase productivity by up to 30 per cent and reduce the cost of cultivation by up to 20 per cent. At present, Indian farmers are adopting farm mechanisation at a faster rate in comparison to recent past. Farm mechanisation may suggest prosperity for farmers, but only if they can afford it. Small farmers with meagre landholdings and limited capital get implements and machines on rent, which increases the input cost.
While cost of irrigation has gone up due to increasing fuel price, the cost of renting tractor-related farm operations has also increased by about 20 per cent since 2017, according to Goldfarm, which provides