Context:

The recently enacted law that dismantles the monopoly of APMC (agricultural produce market committee) mandis, has raised concerns that farmers may no longer be assured MSP for their crop.

Minimum Support Price (MSP)

• The Minimum Support Price (MSP) is only a government policy that is part of administrative decision-making. The government declares MSPs for crops, but there’s no law mandating their implementation.
• The Centre currently fi xes MSPs for 22 farm commodities —
  • 7 cereals (paddy, wheat, maize, bajra, jowar, ragi and barley)
  • 5 pulses (chana, arhar/tur, urad, moong and masur) 7 oilseeds (rapeseed-mustard, groundnut, soyabean, sunfl ower, sesamum, saffl ower and nigerseed)
  • 4 commercial crops (cotton, copra and raw jute) — based on the CACP’s recommendations.

Announces MSP

• The Cabinet Committee of Economic Affairs announces MSP based on the recommendations of the Commission for Agricultural Costs and Prices (CACP).
• The CACP takes into account demand and supply, the cost of production and price trends in the market among other things when fi xing MSPs.
• The price is announced at the beginning of the sowing season.

The next step in the process

• The Food Corporation of India, NAFED, help the Centre procure select food crops with the help of the States.
• Procured farm products are kept in government warehouses and distributed through the Public Distribution System (PDS) and various food security programmes.

Commission for Agricultural Costs & Prices (CACP)

• The Commission for Agricultural Costs & Prices (CACP) is an attached office of the Ministry of Agriculture and Farmers Welfare, Government of India.
• It came into existence in January 1965.
• Currently, the Commission comprises a Chairman, Member Secretary, one Member (Offi cial) and two Members (Non-Offi cial).
  • The non-offi cial members are representatives of the farming community and usually have an active association with the farming community.

The Farmers Bill

• The Farmers Produce Trade and Commerce (Promotion and Facilitation) Act, 2020 allows farmers to sell their produce outside APMC mandis to whoever, even the end customer, offers a higher price
• The second one — The Farmers (Empowerment and Protection) Agreement on Price Assurance and Farm Services Act, 2020 — allows farmers to enter into a contract farming agreement the buyer for procurement of crops at pre-approved prices.
• The third bill is The Essential Commodities (Amendment) Act which declassifi es items like onions, cereals, pulses, potatoes, edible oilseeds and oils as essential items in normal circumstances.