That’s how market-friendly laws, friendly market can usher farm success

As a showdown between the farmers and the central government continues in New Delhi, an India Today ground report found how the new laws can benefit growers in favourable market conditions.

While the protestors, mostly growing wheat and rice, fear the measures will destroy the price support mechanism — the MSP — and leave them vulnerable to a volatile market, soybean and coconut farmers in central and southern India respectively have incurred handsome gains from the recent reforms.

The MSP regime covers 23 crops, of which the government mainly procures wheat, rice, and some pulses and oilseeds, at minimum floor prices set seasonally.


The MSP for soybean (yellow variety), for instance, is fixed at Rs 3,880 a quintal for this year.

At Harda in Madhya Pradesh, an India Today report found farmers selling the produce as high as Rs 4,266 per quintal in the open market.

Ram Vilas Gurjar, a soybean farmer, said he and several other growers sold their crops at an ITC centre on a premium.

“All farmers have had good margins,” he said. “The new law will give greater autonomy to farmers. They will get better returns, with no brokers in between.”

Farmers at Dewas in Madhya Pradesh were as much satisfied.

Their soybean produce has also earned them better remuneration in the open market, over and above the MSP.

“The new amendments in the farm laws are beneficial for farmers,” said Kamal Patel after selling his soybean produce to a private institutional buyer.

“In this competitive system, farmers are getting better results with the ITC setting up its chaupal (buying facility) here. The centre has sitting arrangements for the farmers, drinking water facilities, and electronic weighing machines. Farmers have got rid of middlemen and are getting better returns,” he added.

Down south in Tamil Nadu, a state known for coconut farming, farmers say they have been able to sell their produce to private players at a price higher than this year’s MSP of Rs 2,700 a quintal of the de-husked variety.

After the new laws, farmers here have organized weekly auctions of coconuts, a Madurai farmer, R Nallapan, told India Today. He found the free-market sale more profitable.

“We were selling coconuts at a loss by giving away 150 coconuts for free. And now, after giving in the auction, we are selling coconuts on profit. We thank the state government for arranging this,” he said.

Nallapan believes the same model of private auction can help rice farmers.


As of now, there are some 7,000 government-regulated mandis across the country. Punjab and Haryana rank among the states with the most robust mandi system.

Infographic: India Today DIU

Licensed commission agents, or arhtiyas, as they are called in the two northern states, broker procurement.

The MSP-based buying by the government has its origin in the rationing system introduced by the British during World War II. A department of food came up in 1942. After Independence, it was upgraded into the ministry of food.

Those were the times when India faced acute food shortages. When the Green Revolution started in the 1960s, India was actively looking to shore up its food reserves and prevent shortages.

The MSP system finally started in 1966-67 for wheat and was expanded further to include other essential food crops. This was then sold to the poor under subsidised rates under the public distribution system.

The MSP, however, finds no mention in any law even if it has been around for decades. While the government does declare the MSP twice a year, there is no law making MSP mandatory.

What this technically means is that the government, though it buys at MSP from farmers, is not obliged by the law to do so.

As a matter of fact, there is no law that says that the MSP can be imposed on private traders as well. Earlier, the Commission for Agricultural Costs and Prices recommended legislation to iron out a concrete MSP law for farmers, but it was not accepted by the centre.

In an interview to India Today this week, union agriculture minister Narendra Singh Tomar also said the MSP cannot be put into the new farm laws but vowed that the system, as it works, is going to stay.

“The opposition,” he said, “had been in power for many years. Why didn’t they include the MSP in the law? Why are they bringing this up now? There are some things which are decided by the administration. We cannot make laws for everything.”

Asked about the RSS-affiliated Swadeshi Jagran Manch’s demand for amending the farm laws or giving a guarantee on the MSP, the minister said, “Every organisation has its own view but the government has to take a holistic view. The centre’s priority is farmers and their benefits. That’s why PM Narendra Modi has increased the MSP and is trying that in the field of agriculture.”

“The farmers should get funds from the government as well as policies that help increase their production, harvest, and promote expensive crops in order to generate maximum profits. Our government’s aim is that farmers’ income should double by 2022. PM-Kisan Samman Nidhi Yojna is this country’s first such policy where Rs 75,000 crore is transferred from the government to the farmers’ accounts,” he said.


At a modern farm in Roorkee, a farmer entrepreneur, Manmohan Bhardwaj, explained the benefits of free-market from his own experience in farming mushrooms, a non-traditional cash crop outside of the MSP system.

“You’ll be able to sell your produce anywhere in the country now — Pune, Mumbai, anywhere,” he said. “This is a pro-farmer law. But the problem is that there’s a lot of politics in our country. Those in the opposition get united to downgrade those in power.”

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