Indian Farmers Need Income Support, not MSP

(This short article is based on noted agriculture expert, Devinder Sharma’s ideas. The Karnataka government is taking a keen interest in his ideas and a commission has been set up to explore his recommendations.)

farmersDuring the green revolution, a common message given to the farmers was that the more you sow, the more you produce and hence, more you earn. The result was heavy investment by the farmers on pesticides, fertilizers, seeds and the farming machinery.

However, even after several decades, our farmers are still battling with poverty. The NSSO farm income survey of 2003-04 only confirmed their sorry financial status. More than the surveys, the widespread farmers’ suicide, after the so called economic reforms and liberalization was initiated in 1990s, are graphic proof of their desperate and precarious situation. If the government did not repeat the survey, it must be only to avoid embarrassment.

We all know it very well that today a government peon and even the lowest rank employees earn far more, and without much labor or investment. The minimum support price (MSP), which has been always used to a political tool to charm the farming community, is relevant to only that section of the farming community that has the capacity to take their produce to the mandis. Knowledgeable people say that the vast majority of small farmers (estimated to be well over fifty percent of the farming community) have hardly any surplus to sell. Their efforts, however, help them survive. They are at least self reliant in food; that’s the consolation.

Imagine what would happen if they stop farming tomorrow: their food must be produced by other farmers or be imported. This is a real danger as the current economic policies encourage migration towards the cities. Look at how the agricultural lands around the cities are being given away to real estate developers; thus, shrinking the land area under agriculture. The government must initiate a survey to find out how many farmers have converted themselves into real estate agents in the past 10 – 15 years. That’s has emerged as a new area of business under the current economic policies

The point is: the small farmers do produce wealth. Is there any reason why they should not be compensated? Even the most incompetent government employees are entitled to regular monthly income and retirement benefits as per government rules, so why there is no such policy for the farming community which probably does the most labor intensive work in the country.

Those working with global networks tell a consistent pattern worldwide: there is highly subsidized farming in the developed countries but the highest level of subsistence farming in the developing countries such as India.

Therefore, the best way to bail out subsistence farmers is to provide them with direct income support as is done in the developed and industrialized countries. The MSP is inherently biased in favor big farmers who form just a minority in India. According to noted trade policy expert, Devinder Sharma, it can be a game changer and will inject a fresh lease of life among the Indian farmers and has the potential to reverse the ciy bound distressed migration. It will also insulate the farmers from the vagaries of the market demand.

The direct income support should be location specific since agriculture costs vary depending upon the geographic area and factors such as the land size, soil quality, water availability and so on. The direct income support policy, however, must not encourage farmers to sit idle, yet keep them away from distress migration.

Why FDI in Retail and Commodity Trading are just a Mirage

It is argued that by eliminating the middlemen the direct purchase from the farmers will raise their income. Another connected idea, commodity trading, is also being much talked about. If they can really augment farmers income, they will go a long way in reducing the agriculture subsidy. These two mechanisms have been operational in the US which is also home of well known retailer, Walmart. Yet, the farmers were given a subsidy of Rs 12.50 lakh crore during 1995 – 2009, claims Devinder Sharma. For instance, cotton farming the US was made economically viable by the income support, and not by Walmart buying or commodity trading. Plainly speaking, commodity trading favors traders and speculators, not farmers.

According to an analysis of 2005, the total production of cotton was worth 3.9 billion dollars but the farmers were paid support of 4.7 billion dollars. On top of it, textile industry was paid 187 million dollars to buy that subsidised cotton. This made the US farmers “efficient” and they priced out the “inefficient” farmers of the West Africa and India’s Vidarbha region. The later lost not because of low productivity, but due to lack of subsidy. The US just can’t afford to cut subsidies, despite championing it for other countries. When it lost a case filed by Brazil, it did not cut its domestic subsidies, but instead started paying 147 million dollar support to the Brazillian farmers.

As in the West, Indian Farmers Need Direct Income Support

The Silent Tsunami of Hunger

About Goodpal

I am a firm believer in healthy people (mind and body both), healthy societies and healthy environment. I also undertake content writing and documentation projects. Please feel free to comment, share and broadcast your views. If you wish to write for this blog, please contact me at Thanks for stopping by. Have a Good Day!
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6 Responses to Indian Farmers Need Income Support, not MSP

  1. satyaveer says:

    Fantastic….man of words .
    You had touched almost all parts of the article
    Thank you sir…..
    Keep it up…I would be there to read always..

  2. Ugta Suraj says:

    Why are you cynical on removal of middlemen and encouraging direct selling… subsidy wars cant be won with developed countries my friend because they are rich.. we are yet to reach that place.. till then we have to make the farmers self reliant not rich by doles and that too such subsidies we cant pay for long due to our rising population and weaker economy.

  3. Siri says:

    Do you have an idea how US subsidizes its farmers?

  4. Goodpal says:

    Thanks for sharing Atul – Ugta Suraj! It is always delightful to read what you write from a very sharp mental pencil!

    Sure middlemen needs removing and corruption needs wiping out. There is no subsidy war here; it is internal matter how India does it – with or without calling it subsidy! The goal is to keep food prices low, always.

    6 – 9% “growth” is impressive by all means. We don’t have a weak economy – we do have a weak government for last 10 years. This should change for better in May this year, I am positive.

    The right to education, particularly if girls are sent to school – indications are positive – is going to change Indian society even if the quality of education remains poor! Some schooling is always much better than no schooling!! This will have an all round impact on population growth which is already on decline.

    So, if we carefully analyze we can have a better future; not everything is gloomy although problems are daunting! 🙂

    Do keep sharing here and on FB. You appear to be a good team player and i am glad to have you with me.

    To Siri:

    Yes, the US has its own unique ways. For example, suppose farmers end up with surplus grain stock of some particular grains, for whatever reason. How about helping some corporate houses through indirect channels to buy those stocks. The point is: don’t let the farmers down. You may do some search and learn about other innovative ways. Where there is a will there is a way!! 🙂

    It is always refreshing to see your thoughtful comments and question. I admire your curiosity to explore and learn more.

    Wish you both a wonderful day!

  5. Ankur Dixit says:

    How government will identify beneficiary because most of farmers engage in farming are sharecroppers. So in your proposed way income will go to people have land title.These people comes from well of people family.
    India has worlds 10% agriculture area around 141 millions hectare and our neibhour China has only 80 millions hectare of agriculture land and they are largest producers and net exporters. So here issue not shortage of land but low productivity. Our people don’t have other alternative jobes.

  6. Goodpal says:

    Ankur, the solution lies in what you wrote here. Land reforms and some type of income support. To be called a farmer one need not have land. Now we have technology to keep data base of who are involved in farming. The issue has become so large now because no one paid heed to agriculture sectors and farmers problems in the past decades. MSP came out as the only cure all medicine. There are in fact a plethora of issues that need addressing.

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