“If farmers survive, the nation thrives. But without fair prices for their produce, how will the future of agriculture sustain itself?” Dr. M.S. Swaminathan

India’s agrarian economy hinges on the Minimum Support Price (MSP), a policy designed to shield farmers from the unpredictability of market forces. According to the National Sample Survey Office (NSSO), more than 50 per cent of Indian farmers are in debt, with a significant portion struggling to recover even their basic input costs. Theoretically, MSP is a government-mandated minimum price meant to ensure that farmers receive fair compensation for their produce. However, in practice, this policy often remains a distant reality. For millions, MSP is like a mirage ~ real and beneficial for a select few but elusive for the majority who are left to negotiate with middlemen and an unregulated market. This raises a crucial question: is MSP genuinely a safeguard for farmers, or is it merely a political instrument wielded to secure the agrarian vote bank? A closer look at MSP implementation reveals stark disparities.

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The Commission for Agricultural Costs and Prices (CACP) recommends MSP for 23 crops, including rice, wheat, pulses, oilseeds, and cotton. However, procurement remains highly skewed. The Food Corporation of India (FCI) and state agencies procure around 85 per cent of the rice and 74 per cent of the wheat produced in Punjab and Haryana at MSP, ensuring financial security for farmers in these states. In contrast, in states like Bihar, West Bengal, Odisha, and Assam, where procurement infrastructure is weak or nearly absent, farmers often have no choice but to sell their produce to private traders at prices much lower than the declared MSP.

The Shanta Kumar Committee Report (2015) estimated that only 6 per cent of Indian farmers benefit directly from MSP procurement, leaving the vast majority vulnerable to market fluctuations. This inequality extends beyond staple grains. Despite consistent increases in MSP for pulses and oilseeds, actual procurement is dismal. For instance, in the 2022-23 marketing season, while the MSP for mustard was set at Rs 5,450 per quintal, farmers in Rajasthan and Madhya Pradesh were often forced to sell at Rs 4,500-4,800 per quintal due to inadequate government procurement. Similarly, the Cotton Corporation of India (CCI) has often been unable to procure enough cotton to ensure stable prices, leaving farmers at the mercy of monopolistic private traders and mills.

In the case of sugarcane, farmers face a different battle altogether ~ delayed payments by sugar mills, with arrears reaching Rs 25,000 crore as of March 2023, according to the Ministry of Consumer Affairs, Food & Public Distribution. In case studies it is found that the contrast between Punjab and Bihar exemplifies the disparities in MSP procurement. While Punjab farmers benefit from nearly guaranteed procurement of wheat and rice at MSP, farmers in Bihar lack adequate government procurement centres. As a result, they are often forced to sell their produce to middlemen at lower prices. This has created stark income ineq – u alities, leading to increased migration of Bihari farmers to urban areas in search of better economic opportunities.

The absence of a robust procurement system in Bihar undermines the very purpose of MSP, leaving farmers vulnerable to exploitative pricing and financial distress. Similarly, Maharashtra’s cotton farmers faced a severe crisis in 2021 when the CCI failed to procure sufficient quantities due to logistical bottlenecks. With no option but to sell to private traders, many farmers received prices up to 20 per cent lower than the declared MSP. This highlights the inefficiencies in MSP implementation, where the policy exists in theory but fails to deliver in practice due to structural and administrative constraints.

West Bengal faces a similar challenge, particularly for paddy farmers. Despite being one of the largest rice-producing states, MSP procurement remains minimal due to a weak procurement network. Many small-scale farmers in districts like Purulia and Bankura have reported selling paddy at prices that are Rs 300- 500 per quintal lower than the declared MSP due to the absence of adequate government procurement centres. Additionally, frequent delays in payment further deter farmers from relying on MSP, forcing them to depend on local traders who offer immediate cash but at significantly lower rates.

This structural inefficiency pushes many farmers into debt cycles, limiting their ability to invest in future crops. On a more positive note, Karnataka’s decentralized procurement model for pulses provides a promising alternative. In 2019, the state government implemented a system allowing farmers to sell tur dal directly to government agencies, bypassing middlemen. This initiative ensured that MSP payments reached a larger number of farmers and reduced price exploitation by traders. Such a model, if expanded nationwide, could help bridge the gap in MSP accessibility and provide small and marginal farmers with the financial security they desperately need.

MSP has increasingly become a political tool, with successive governments announcing MSP hikes as a gesture of support before elections. In the 2018-19 budget, the government declared that MSP would be set at 1.5 times the cost of production, a move that was widely publicized. However, the reality remains starkly different. The Swaminathan Commission had recommended MSP based on the C2 cost (comprehensive cost, including family labor), but the government largely follows the A2+FL formula (covering paid-out costs and family labor), resulting in lower effective price guarantees. For example, while the government declared the MSP for paddy at Rs 2,040 per quintal for the 2023-24 kharif season, farmers in eastern India, due to procurement bottlenecks, often received only Rs 1,600-1,800 per quintal from private buyers. The challenges to MSP implementation are manifold.

Weak procurement infrastructure remains a significant hurdle, with over 70 per cent of small and marginal farmers (owning less than 2 hectares of land) unable to access MSP procurement centres due to logistical difficulties. Market fragmentation is another issue; the Agricultural Produce Market Committees (APMCs) are often dominated by powerful trader lobbies that depress prices. The 2019-20 Situation Assessment Survey of Agricultural Households found that only 23.5 per cent of farmers were aware of the MSP mechanism, highlighting a severe lack of awareness.

Additionally, climate change-induced uncertainties ~ such as unseasonal rains and droughts ~ further erode the potential benefits of MSP, as seen in the wheat crop losses of 2022, which forced many farmers to sell at distress prices despite an MSP hike. Looking at global agricultural policies provides valuable insights into strengthening India’s MSP system.

Countries like the United States and those within the European Union have developed support mechanisms that are more inclusive and responsive to market dynamics. The U.S. follows a model where farmers receive direct compensation when market prices fall below a set threshold, ensuring financial stability without the need for large-scale government procurement. Similarly, the EU’s Common Agricultural Policy (CAP) provides subsidies and income support to farmers while encouraging sustainable agricultural practices. Adapting elements of these models to India’s agricultural landscape could help address some of the inefficiencies in the current MSP framework.

To transform MSP from a mere announcement to an effective safeguard, a multipronged approach is required. The government must expand procurement infrastructure, especially in states where farmers currently lack access. Digital registration platforms, such as the PM-KISAN and e-NAM initiatives, should be leveraged to ensure fair and transparent procurement. The scope of MSP must be extended beyond rice and wheat, with increased procurement targets for oilseeds, pulses, and cotton to stabilize farmer incomes. Strict regulatory oversight of private traders and buyers is necessary to curb exploitative pricing.

Furthermore, decentralized procurement models, where state governments are empowered to procure crops at MSP with central assistance, can ensure that a greater number of farmers benefit. Merely announcing MSP hikes will not resolve the agrarian crisis. What matters is effective execution. If market manipulation, weak enforcement, and delayed procurement continue, MSP risks becoming nothing more than a political slogan. To genuinely safeguard the interests of farmers, a resolute and actionable strategy must be implemented ~ one that prioritizes structural reforms over electoral rhetoric.

(The writer is an agricultural researcher based in Jalpaiguri, West Bengal and a Young Professional at the Cost of Cultivation Project under the Commission for Agricultural Cost and Prices, Ministry of Agriculture & Farmers’ Welfare, Government of India)