MSP Committee : Is this beginning of lasting Farm Reforms ?

Context :

Govt sets up 28-member committee to make MSP effective / Business Line / 19 July 2022

Extract :

Eight months after announcing the repeal of farm laws, the Centre has set up a 29-member committee, as promised by Prime Minister Narendra Modi, that will look into / study :

# how to make the minimum support price ( MSP ) more effective and transparent.

# measures to promote zero-budget natural farming and crop diversification

# the practicality of giving more autonomy to the Commission for Agricultural Costs and Prices

# suggest measures to make MSP more SCIENTIFIC

# reforms to the Agricultural Marketing System to ensure farmers get higher value for their produce

# suggest programmes and schemes for Value Chain Development and for Area Expansion under the Indian

Natural Farming System

# mapping for existing Cropping Patterns in agro-ecological zones of producer and consumer States will be

done separately so that a SYSTEM is worked out to ensure remunerative prices for different crops

MY TAKE :

In the past , I have sent following e-mails to Shri Tomarji ( Agriculture Minister ) :

Ø Influence farmers and win Votes ? …………………………………….[ 04 Feb 2019 ]

Extract :

Can we take help of Technology to solve these problems ?

Yes , of course !

What Technology ?

We need technologies which will , dynamically / automatically , compute for each crop ,

# the costs of all the “ INPUTS “ (water-fertilizer-seeds-power –labour ), based on NORMS

# “ Output “ from the area of land owned by these farmers ( in Kg )

# MSP ( since INPUTS will vary from crop-to-crop and area-to-area )

# transfer the amount to Jan Dhan bank accounts of each beneficiary farmer ( DBT )

It is possible to get our constellation of 7 NaviC satellites to “ map / geotag “ , each and every farm ( with a resolution of 1 meter ) and calculate its area

This can be verified by using technology offered by…. what3words

For each type of crop , INPUT NORMS are already established , using historical data

OUTPUTS NORMS ( kg / acre ) for different crops , are statistically established figures

“ Agricultural Crop Assessment “ is being offered by Planet , BlackSky, Satellogic

“ Humidity Sensors “ developed by Dr Shalini Prasad

As far as CROP INSURANCE is concerned, Remote Sensing Satellites are already being deployed

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Ø Selling Farm Laws before selling Farm Crops…………………… [ 24 Sept 2020 ]

Extract :

Dear Shri Tomarji

[ nstomaroffice@gmail.com / ns.tomar@sansad.nic.in ],

I am sure those farmer organizations would send their delegates to meet you. When they do, I request you to consider telling them following :

Ø Around the world, companies employing new technologies have started “ revolutionizing “ the agriculture

Ø On your own, you may not be able to get these companies to “ License “ their technologies to individual

Indian farmer but they would readily license Indian Companies who sign an agreement with you for

CONTRACT FARMING . In turn, these Indian Companies can train you on implementing these technologies

on your farms

Ø On part of the Central Government, we will undertake following PRO-ACTIVE actions for bringing these

technologies to India :

# We will incentivize our 75 Agriculture Universities and 700 + Agriculture Colleges , to set up on

their premises, AGRI-TECH INNOVATION CENTRES, which will offer subjects on “NEW AGRI-TECH“,

collaborate with Agri- Tech Companies / Universities around the World and train our farmers

# We will incentivize these foreign AGRI-TECH companies to set up “ PROTOTYPE “ operations in

India for DEMO purposes. We will offer them free land / electricity + expenses incurred in

training Indian farmers . There will be one such demo-center in each of our 718 districts

# We will urge companies entering into CONTRACT FARMING agreements with a farmer, to construct

on the farm premises of that farmer, GRAIN STORAGE SILOS / COLD STORAGE ROOMS, to

enable a farmer to store his produce for a longer period, without perishing under our harsh climate

We will allow the concerned companies to set off expenses incurred in constructing these

facilities towards their CSR obligations.

Alternatively , we will consider use of already announced Agri Fund of Rs 1 Lakh x Crore , for this

purpose . We have also provided Rs 700 crore for setting up COLD CHAIN across the country

===============================================================

Ø Thank You, Shri Tomarji……………………………. [ 20 Nov 2020 ]

Extract :

Dear Shri Tomarji,

Various Farmers Unions have expressed following fears in respect of the FARM LAWS just passed :

Ø The Contract Farming law will make them vulnerable to exploitation by Corporations

Ø If Contract Farming picks up in a BIG WAY, Govt may stop buying at MSP – might even scrap MSP

Now, if the CONTRACT FARMING Act carries a clause that no contract can be valid / legal ( not even allowed to be registered on e-NAM portal ) if it is below the MSP ( relevant to the contracted crop ), then the farmers fears will get satisfactorily addressed

On top of this, you may want to give assurance following assurance to the farmers :

Ø For the crops which are currently not covered by MSP, we will, in consultation with the Farmers’ Unions come up with MSPs in each case ( for CONTRACT FARMING only ) , over the next 5 years. Such MSPs will be 100 % above the COST of PRODUCTION

Ø The INPUT COSTS ( for each such crop ) will get determined by AI technology as described at :

Influence farmers and win Votes ? ……………………………..[ 04 Feb 2019 ]

Ø How about introducing a PLI for agricultural produce ?....................[ 08 Dec 2020 ]

Extract :

Dear Shri Tomarji,

I suggest introduction of a Production Linked Incentive ( PLI ) for farm produce , by treating agriculture as an INDUSTRY

Logic :

As compared with rest of the world ( other countries ), productivity of major crops in India is very low , as can be seen in following table ( source : TOI / 8 Dec 2020 )

Can we come up with a FORMULA ( obviously, to be devised by Farm Experts ) whereby :

# A farmer gets a certain ( graded ) INCENTIVE for each SLAB of “ Increased output “ , over the BASE

OUTPUT for the BASE YEAR ?

We already know :

Ø Each farmer ( by Aadhar / Jan Dhan a/c / Mobile etc )

Ø Farm holding ( hectares ) of each farm

Ø Each farmer’s output ( ave of past 3 years )

We can take help of NaVIC satellite based technology to automatically compute the yield of each and every farm , compute the INCENTIVE AMOUNT and automatically transfer ( DBT ) into each farmer’s bank account . Absolutely NO human intervention / no middlemen ( adatiyas ) !

By no means, I am suggesting that this mechanism ( to incentivize the farmers to raise the productivity and catch-up with the World ), is meant to replace MSP , which should continue as before

Nor would this PLI scheme bind the farmers to sell their produce within and outside of APMC mandis or prevent the Govt to buy it at MSP

Ø Production Linked Incentive for Rice ( Paddy )……………………. [ 08 Dec 2020 ]

Extract :

Here is a Conceptual Frame-work :

Ø Through the proposed INCENTIVE FORMULA , we want to INCENTIVIZE all farmers to implement latest

technology and DOUBLE the “ Ave Yield ( Kg / Hactare ) “

Ø In such a scheme, we want MORE INCENTIVE for marginal / small farm-holdings and LESS INCENTIVE for

medium / large farm-holdings

Ø For Rice , ( Paddy – A grade ) ( taken for demonstration purpose ) :

# Current MSP is Rs 1888 / quintal ( Rs 18.88 / Kg )

# Average Output / Hactare is > 4679 Kg ( World Ave ) and > 2638 Kg ( India Ave )

====================================================================

INCENTIVE MATRIX

====================================================================

Incentive Amount in Rs / Kg ( for incremental output over India Ave of 2638 Kg / Hactare, is shown below

[ For calculations, click : Production Linked Incentive for Rice ( Paddy ) ]

There will be NIL incentive for a farm whose yield is below the India average

Implication for a Marginal Farmer who manages to raise his yield from India Ave ( 2638 Kg / hectare ) , all the way upto ( say ) 4900 Kg / hectare [ see first row of this table ] :

( A ) for the BASE figure ( 2638 Kg ) > NIL incentive

( B ) for next 200 Kg ( reaching 2900 Kg ) > Rs 13 x 200 = Rs 2600 / -

( C ) for next 400 Kg ( reaching 3300 Kg ) > Rs 14 x 400 = Rs 5600 / -

( D ) for next 400 Kg ( reaching 3700 Kg ) > Rs 15 x 400 = Rs 6000 / -

( F ) for next 400 kg ( reaching 4100 Kg ) > Rs 16 x 400 = Rs 6400 / -

( G ) for next 400 Kg ( reaching 4500 Kg ) > Rs 17 x 400 = Rs 6800 / -

( H ) for next 400 Kg ( exceed World Ave ) > Rs 18 x 400 = Rs 7200 / -

Total …………………………………………………………… Rs 34,600 / -

In the topmost slab ( 4900 kg / hectare ), a farmer gets :

Ø Rs 18.88 / kg by way of MSP, and

Ø Rs 18.00 / Kg by way of PLI

Hence DOUBLING of income !

Of course, this is merely a CONCEPTUAL FRAME-WORK for getting the farmers to quickly adopt latest technologies in order to increase farm yield in line with the rest of the world

This incentive scheme will eliminate all resistance to introduction of technology .

In fact, this will make the farmers to pro-actively engage with various government “ Agricultural Research “ Agencies for help / assistance

To sell this idea [ to farm experts and to general public ] , Government should carefully calculate and widely publish, how “ Per Kg “ Cost of Production would dramatically FALL , due to “ Economies of Scale ( factory-like mass-production ) “

And when there is huge decrease in per kg “ Cost of Production “ , that will make our agricultural produce “ price competitive “ with international prices and give a huge boost to Agri-Exports !

I assume PLI will not attract any sanctions from WTO as any kind of “Farm Subsidy “ – which USA – EU etc are giving to their farmers

This incentive scheme will spur “ Farm Mechanization “and boost use of Tractors – Harvesters – Combines etc ( a big boost to the Farm Machinery Industry, without having to subsidize its production )

With regards,

Hemen Parekh / hcp@RecruitGuru.com / 19 July 2022