The Hindu : Karnataka ryots lack awareness of MSPs

Online edition of India's National Newspaper
Saturday, Mar 01, 2003

Southern States

Southern States - Karnataka

Karnataka ryots lack awareness of MSPs

By Nagesh Prabhu

BANGALORE FEB. 28. Only a small minority of farmers in Karnataka seem to be aware of the Minimum Support Prices (MSPs) for agricultural commodities, though the Government has been repeatedly making tall claims about the facility.

The impact of MSPs on market prices is negligible in the State, and a majority of farmers in Mandya, Belgaum and Gulbarga districts are unaware of their existence.

The facility, which was introduced by the Union Government in 1967, helps traders buy commodities from farmers in bulk, and sell them under the scheme to the Government, according to the study, `The impact of minimum prices on agricultural economy in Karnataka,' conducted by the Institute for Social and Economic Change (ISEC), Bangalore. However, it has not reached farmers except in the regions of commercial agriculture. Timely intervention by procurement agencies in the yards of the Agriculture Produce Marketing Committee is also not taking place.

In the past 25 years, MSPs have covered 11 crops — paddy, wheat, jowar, ragi, maize, pulses, tur, groundnut, sugarcane, sunflower and cotton. But 92 per cent of paddy growers and 88 per cent of groundnut growers in Belgaum district, and 98 per cent of cultivators of pulses in Gulbarga are unaware of MSPs. Eighty-two per cent of jowar cultivators in Belgaum, and 88 per cent in Gulbarga have not got any incentive under the MSP scheme, according to the study.

In Mandya, 58 per cent of sugarcane growers are aware of the policy and benefit from it (sugar factories procure most of the produce). However, the policy has not helped farmers who grow crops such as ragi, jowar, maize, tur, gram and groundnut in Mandya, Gulbarga, and Belgaum districts.

Markets, not MSPs, determine the prices of crops in the State, and there are big differences between the prices of a commodity in markets which are only about 150 km. away from each other.

R.S. Deshpande and T. Raveendra Naika, who conducted the study, say that the "market density" in the State is too low to eliminate the role of middlemen. The density has increased from 1.6 markets per lakh hectare gross cropped area in 1970 to about four markets in 2001. However, it continues to be inadequate for the effective functioning of the price mechanism.

Minimum support prices are announced to protect consumers and farmers when market prices fall below the base under the MSP scheme. But often, the MSP of a commodity is greater than the wholesale price. The wholesale prices of sunflower, groundnut and jowar have remained the same as their MSPs, or have gone below them. This indicates the failure of the price intervention mechanism, Mr. Deshpande and Mr. Naika say.

As per the policy, MSPs are to be declared before the sowing season. But often, they are announced well after sowing is completed and farmers are committed to the crop. Last year, MSPs were announced in September-end, when it was time for harvest, and they ceased to influence the area allocated under a crop. In the 1990s, cropping patterns were influenced more by market prices than MSPs.

Lack of coordination

Institutions such as the National Agricultural Cooperative Marketing Federation (NAFED), Karnataka Food and Civil Supplies Corporation, Karnataka State Cooperative Marketing Federation, and Karnataka Oilseeds Growers' Federation are involved in the procurement process.

There is hardly any coordination among them. Despite modern communication facilities, they do not act quickly. Procedures take more than two weeks for completion, and farmers are compelled by circumstances to sell their produce to middlemen at the prices dictated by the latter, Mr. Deshpande points out.

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