Farmers' protest | Centre puts forward 5-year plan at round 4 talks: What's next?

Farmers are staging protests to exert pressure on the government to address a range of issues, including demands for MSP for agricultural produce.

A committee comprising three Union ministers on February 18 put forth a proposal suggesting that government agencies commit to procuring pulses, maize, and cotton crops at minimum support prices (MSPs) for a duration of five years through agreements with farmers. Union Minister Piyush Goyal unveiled this innovative proposition subsequent to a long meeting with farmer representatives, spanning more than four hours. Furthermore, he indicated that farmer leaders would evaluate the government's proposals and participate in talks, with decisions expected by the morning of February 19.

What did the Centre Propose?

Cooperative societies such as the National Cooperative Consumers Federation (NCCF) and the National Agricultural Cooperative Marketing Federation of India (NAFED) are poised to engage in agreements with farmers cultivating 'tur dal,' 'urad dal,' 'masoor dal,' or maize. Under these contracts, the societies will commit to purchasing the farmers' crops at MSP for the forthcoming five-year period.

Additionally, the absence of a purchasing limit and the introduction of a dedicated portal mark significant advancements in this initiative. These measures are expected to yield multiple benefits for Punjab's agricultural sector, such as preserving groundwater levels, mitigating land degradation, and rejuvenating agriculturally stressed lands.

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CCI Plans 5-Year Cotton Procurement Programme

The Cotton Corporation of India (CCI) is gearing up to procure cotton from farmers at MSP for an extensive five-year period, subject to the formalisation of an agreement. Furthermore, the government aims to revive the cotton crop in Punjab. Any farmer who revives or cultivates cotton will have the opportunity to enter into a legal agreement with the CCI. Under this agreement, any crop harvested from the field through diversification will be procured by the CCI at MSP for a duration of five years.

Farmers Discuss Govt's MSP Proposal

Following the meeting's conclusion, farmer leader Jagjit Singh Dallewal said that they would deliberate on the government's proposal regarding MSP with their forums and experts before making a decision. He emphasized that their march would persist until their demands are addressed, highlighting that several other demands also require negotiation.

Also Read | Farmers' Protests LIVE Day 6: 'Delhi Chalo' agitation paused after Centre proposes 5-year MSP plan

Farmers Ready for Extended 'Delhi Chalo' March

Sarwan Singh Pandher, General Secretary of the Punjab Kisan Mazdoor Sangharsh Committee, mentioned that they would review the government's proposal over the next two days. He indicated that the government would also consider other demands. Pandher asserted that if no satisfactory outcome is achieved, the 'Delhi Chalo' march will continue on February 21.

Also Read | Farmers' march for price guarantee: Factors behind the agitation in Delhi

Central Ministers Hold Talks with Punjab CM Mann

Prior to meeting with the farmer leaders, Union Ministers held a separate discussion with Punjab Chief Minister Bhagwant Mann, Punjab Chief Secretary Anurag Verma, and DGP Gaurav Yadav at Hotel Hyatt. In addition to addressing farmer-related concerns, discussions in this meeting also covered the law and order situation of the state.

Govt Suggests Potential Agricultural Loan Waivers

During the four-hour meeting that started at 8:15 pm on February 18, several issues were discussed extensively. Reports suggest that the Centre proposed that agricultural loans obtained from government-controlled banks could potentially be waived off, while emphasising that farmers would be responsible for repaying private loans. Additionally, a farmer leader raised concerns regarding the implementation of the recommendations outlined in the Swaminathan Commission report.

Meetings End Without Resolution

The meetings held on both February 12th and 15th concluded without reaching a resolution. Jagjit Singh Dallewal representing the United Kisan Morcha (Non-Political) and Sarwan Singh Pandher, the General Secretary of Kisan Mazdoor Sangharsh Samiti, presented the farmers' perspectives during these discussions. Also, during these meetings, Union Ministers paid tribute to the deceased farmer and the Haryana Police soldier who lost their lives at Shambhu border.

The meetings conducted on February 8, 12, and 15 ended without reaching a consensus.

Govt Stresses A2+FL Formula in Talks 

During the discussions, the Centre highlighted the A2+FL formula. Under this formula, the cost of the crop would be calculated based on the prices and wages of seeds, fertilisers, irrigation, and other associated expenses.

Furthermore, the government suggested that until the code of conduct is enforced, farmer leaders should explore potential measures that can be implemented, according to several media reports. Union ministers proposed the possibility of withdrawing cases registered against 3,500 farmers during the previous movement.

What is A2+FL?

A2+FL, or 'All paid-out cost plus imputed value of Family Labour,' is a formula used to calculate the cost of crop production. It includes two main components:

(1.)  A2: This includes the direct expenses borne by the farmer for inputs such as seeds, fertilisers, pesticides, labour, leased land, fuel, irrigation, and other similar costs directly associated with cultivating the crop.

(2.) FL: This represents the imputed value of unpaid family labour contributed to the farming operations. It accounts for the labour provided by family members without financial compensation.
By combining the A2 costs with the imputed value of family labour (FL), the A2+FL formula provides a more comprehensive estimation of the total cost incurred by the farmer in producing the crop.

More significantly, this calculation is vital for assessing the profitability of farming and determining appropriate support measures such as MSPs.

Why are the Farmers Protesting?

Farmers are staging protests to exert pressure on the Centre to address a range of longstanding grievances. Led by more than 200 farmers' unions, including prominent groups like the Samyukta Kisan Morcha and the Kisan Mazdoor Morcha, the ongoing 'Delhi Chalo' march began on February 13. The main aim of these demonstrations is to compel the central government to fulfill their demands.

Central to their demands is the enactment of legislation guaranteeing a MSP for agricultural produce. This demand was initially raised in 2021 when farmers agreed to suspend their agitation against the now-repealed farm laws. Additionally, they are advocating for the implementation of the recommendations outlined by the Swaminathan Commission, which emphasises fair and remunerative prices for crops. Moreover, farmers are calling for the provision of pensions for both farmers and agricultural labourers, as well as the waiver of farm debts.

What is Minimum Support Price (MSP)?

The MSP plays a vital role in safeguarding farmers in India, as it is established by the government to ensure a minimum price for their crops. Announced each agricultural season, these rates aim to provide assurance to farmers that they will receive fair compensation for their produce.

By offering predictability and stability, the MSP framework encourages farmers to make consistent investments in their agricultural activities, thereby enhancing overall production in the sector.

Under the MSP system, the following crops are covered:

Kharif crops:

• Paddy

• Jowar

• Bajra

• Ragi

• Maize

• Arhar (Pigeon Pea)

• Moong

• Urad (Black Gram)

• Cotton

• Groundnut

• Sunflower Seed

• Soybean

• Sesamum (Sesame)

Rabi crops

• Wheat

• Barley

• Gram (Chickpea)

• Masur (Lentil)

• Rapeseeds & Mustard

• Safflower

• Toria (Oilseed)

Additionally, MSP are announced for:

• Copra

• De-husked Coconut

• Jute

Furthermore, Fair Remunerative Prices are declared for Sugarcane.

Full Procurement of 23 MSP-Covered Crops May Require Rs 6 Lakh Crore Working Capital

According to CRISIL's analysis, the comprehensive procurement of the 23 crops covered by the MSP would require a substantial working capital amounting to nearly Rs 6 lakh crore during the ongoing marketing season. This estimation is predicated on the assumption that procurement is conducted exclusively from agricultural markets (mandis) where prices fall below the prescribed MSP. However, the projected financial burden on the government's finances for the 2023-24 marketing season is anticipated to be approximately Rs 21,000 crore.

Experts' Views

Experts argue that the withdrawal of MSP support by any government is highly improbable, given the substantial political backing from the farming community. Against the backdrop of ongoing farmers' protests, the Congress party has already pledged to enact a legal guarantee for MSP, aligning with the recommendations of the Swaminathan Committee, if voted to power.

Amid the protests, eminent agricultural economist Ashok Gulati last week told news agency ANI that mandating MSP as a legal obligation could introduce significant complexities into the food procurement system. Instead, the economist proposed alternative mechanisms such as a price stabilisation fund to safeguard the interests of the farming community.

Gulati, a former Chairman of the Commission for Agricultural Costs and Prices (CACP), said the demand for MSP as a legal obligation as "unwise" and cautioned that it could potentially inflict "damaging" consequences on the exchequer.