NITI Aayog member Ramesh Chand warns of potential food price surge with MSP legalisation

According to Ramesh Chand, determining MSP prices becomes a challenging task due to the dynamic nature of changing crop preferences anticipated in the future

NITI Aayog Member Ramesh Chand speaking with CNBC-TV18 on farmers' demand for legal guarantees for Minimum Support Price (MSP), delved into the challenges, the intricacies of agricultural costs and the potential price impact on consumers.

Chand emphasised that making MSP legally binding could introduce rigidity into the system. He pointed out that adopting MSP legalisation might lead to a considerable increase in food prices, estimating a potential surge of 25-30 percent.

According to Chand, determining MSP prices becomes a challenging task due to the dynamic nature of changing crop preferences anticipated in the future.

Costs for farmers

Chand highlighted the costs borne by farmers. He said for those who own the land they cultivate, the consideration of rental values becomes essential. Additionally, owning machinery or a part of a house incurs an extra cost known as "interest on fixed capital". He further said the variability of this cost across states is contingent on the respective rental values.

Price hike for consumers

Chand said consumers may witness a 25 to 30 percent surge in the prices of rice and other commodities. Chand emphasized that the extent of this increase is subject to variations based on the state and the type of crops.

Consumers will have to buy rice and other commodities at 25-30 percent high, and this will vary from state to state and depends on crops," said Chand.

Legal guarantee for MSP across crops poses challenges

Chand expressed reservations about the challenges associated with providing a legal guarantee for MSP across all crops. The dynamic nature of crop preferences in the future complicates the process of setting MSP prices, he said. Chand highlighted the current demand for staples like rice, wheat, and mustard, and cautions that preferences may shift to millets and others in the coming years.

"MSP prices are very tough to determine given varying choices that are likely in the future. He explains that now the country needs rice, wheat, mustard, etc and after a few years, people may have a preference for millet, etc. Then we do not know what to do with that production when the demand is not there," said Chand.

Chand's advice to farmers: Trust Govt assurances over legal MSP mandates

Chand advocated for farmers to place trust in government assurances rather than seeking legal mandates for MSP. He urged active collaboration between farmers and the government to determine MSP levels based on the changing agricultural landscape and future demand dynamics.

Chand said, "Farmers should not ask for it be done legally, but believe in assurances of the government," and added, "Farmers demand that MSP should be legalised and that they will tell the government what should be the MSP."

Key farmer demands echo in 'Delhi Chalo' March: MSP, loan waiver, and others

The Samyukta Kisan Morcha (Non-Political) and the Kisan Mazdoor Morcha (KMM) led "Delhi Chalo" march, is emphasizing the need for a legal guarantee on MSP for crops. Farmers are also pressing the BJP-led Centre to address their demand for a comprehensive farm loan waiver. Farmers from Punjab are advocating the implementation of the Swaminathan Commission's recommendations, pension for farmers and farm labourers, no hike in the electricity tariff, withdrawal of police cases and "justice" for the victims of the 2021 Lakhimpur Kheri violence in Uttar Pradesh, reinstatement of the Land Acquisition Act, 2013 and compensation to the families of the farmers who died during the agitation against the three farm laws in 2020-21.

The decision to put the 'Delhi Chalo' march on hold for two days arises from concerns over a protester's death and injuries to police personnel during clashes at Khanauri, highlighting the need for a peaceful resolution to the ongoing agitation.