Farmers' protest standoff: Why agitators turned down Centre's MSP proposal

Protesting farmers at the Shambhu and Khanauri borders continue to camp, despite security forces halting their 'Delhi Chalo' march aimed at pressuring the Centre to address various demands.

Agitating farmers' organisations, including Sanyukt Kisan Morcha (non-political) and Kisan Mazdoor Morcha (KMM), which are leading the 'Delhi Chalo' protests, remain steadfast in their demands. They have unequivocally rejected the proposal put forth by the Centre, which suggested entering into a five-year contract with farmers for the procurement of maize, cotton, and pulses—specifically arhar/tur, masur, and urad dals—at minimum support prices (MSPs) through cooperatives, aiming to promote crop diversification.

Dallewal Calls for Comprehensive MSP Formula

Farmer leader Jagjit Singh Dallewal has expressed scepticism regarding the government's intentions, suggesting a lack of seriouness in addressing their demands. Dallewal emphasised the necessity for the government to devise a comprehensive formula for MSP covering all 23 crops. He voiced doubts about the efficacy of the government's proposal, underscoring the lack of clarity therein.

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Proposal to Redirect Funds to Boost Domestic Oilseed Cultivation

Furthermore, Dallewal remarked that upon careful examination of the government's proposal, its inadequacies become apparent. He pointed out the significant sum allocated for purchasing palm oil from abroad, suggesting that if these funds were redirected towards supporting oilseed cultivation domestically, farmers would stand to gain substantially.

Piyush Goyal Praises Govt's Proposal, Farmers Express Reservations

Dallewal from the SKM and KMM's Sarvan Singh Pandher have reiterated their demand for a legal guarantee of MSP on 23 crops, following a C2+50% formula of profit over input cost. While Union minister Piyush Goyal, one of the three ministers who attended the fourth-round talks with farmers on February 18, praised the government's proposal as "out of the box" and emphasised its potential to encourage crop diversification and improve groundwater levels in Punjab, Dallewal and Pandher likened it to contract farming, expressing reservations about its effectiveness.

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Govt's Offer Linked to Crop Diversification

The government's offer was linked to its objective of promoting crop diversification. The farmer leaders were informed that the Centre was prepared to procure three pulses—tur, urad, and masoor—in addition to cotton and maize at MSPs through central cooperatives such as Nafed (National Agricultural Cooperative Marketing Federation of India), NCCF (National Cooperative Consumers Federation), and the Cotton Corporation of India for a period of five years.

Farmer Leaders Set to Resume 'Delhi Chalo' March on Feb 21

After consulting protesters at Shambhu and Khanauri border points between Punjab and Haryana, the two leaders announced plans for farmers to resume their peaceful march towards Delhi at 11 am on February 21. It appears that chaos is set to return to the borders around Delhi, particularly on the Haryana-Punjab side, from February 21, as more than 20,000 protesters have been camping at these locations. Initially, following the offer, the SKM and the KMM had announced a two-day suspension of their planned march to Delhi.

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What is C2+50% formula?

The MSP established by the government for major crops is determined based on recommendations from the Commission for Agricultural Costs and Prices (CACP). The MSP calculation involves three formulas: A2, A2+FL, and C2. The A2 formula incudes the costs incurred by farmers in cultivating a particular crop, including expenses for seeds, fertilisers, pesticides, labour wages, land rent, machinery, and fuel. A2+FL extends to cover all components of A2 as well as the value of the unpaid labor contributed by family members on the farm. The C2 formula comprises A2+FL in addition to costs associated with land ownership, rent, and interest payments on fixed capital.

The Swaminathan Commission recommended setting the Minimum Support Price (MSP) of crops based on the 'C2+50% formula'. This formula involves not only covering the cost of production calculated under the C2 category but also providing an additional 50 percent on top of it, which is considered the profit margin for farming. This formula aims to address the economic challenges faced by farmers and encourage agricultural growth and sustainability.

Govt Proposes MSP Set at Minimum 50% Above Production Costs

The government's proposal to ensure that the MSP is set at a minimum of 50 percent above the weighted average cost of production underscores the complexities of the ongoing talks between farmers and the Centre. This divergence highlights the hurdles encountered in reaching a mutual agreement, suggesting that prolonged deliberations are inevitable.

Previous rounds of discussions conducted on February 8, 12, and 15 have not yielded a consensus, with disagreements primarily centered around the enactment of a legal assurance for MSP.

Govt Cites Financial Constraints

Protesting farmers at the Shambhu and Khanauri borders continue to camp after security forces halted their 'Delhi Chalo' march aimed at pressuring the Centre to address various demands, including a legal guarantee of MSP for all crops and the implementation of recommendations put forth by the Swaminathan Commission. Additionally, protesters are calling for pensions for farmers and farm labourers, farm loan waivers, no increase in electricity rates, withdrawal of police cases against farmers, relief for victims of the Lakhimpur Kheri violence of 2021, and the reinstatement of the Land Acquisition Act, 2013.

The farmers are advocating for the Centre to enact legislation to establish MSP for all crops. However, the government argues that extending MSP to all crops would place a substantial financial strain on the national exchequer.