The row over Bt Brinjal, a genetically modified version of the plant, provoked the government into imposing a moratorium on the commercial cultivation of the plant in India. The debate has revolved around issues of economic efficacy, human health, consumer choice and farmers’ rights. Jairam Ramesh, the Minister of State for Environment and Forests, made public his views on the subject, a gist of which is given below:
In order to understand the process followed by GEAC before giving the green signal to Bt Brinjal, we have made a timeline in which the plant was approved and the bodies involved in the process.
| 2000-2005 | Scientific tests carried out by Mahyco on Bt Brinjal |
| 2006 | Mahyco submits bio-safety data to GEAC (regulatory body under the Ministry of Environment and Forests). Seeks permission for large scale trials. |
| Supreme Court stops ongoing field trials of GM crops due to a PIL filed by civil society representatives. | |
| 2007 | The expert committee 1 set up by GEAC, submits its report. Recommends seven more studies on bio-safety be repeated for reconfirmation of data generated during confined multi-location trials but approves large scale trials. |
| Supreme Court lifts ban on GM crop field trials subject to conditions such as isolation distance etc. | |
| As per GEAC direction, Indian Institute of Vegetable Research (IIVR) takes up the responsibility of large scale trails of Mahyco's Bt Brinjal trials at 10 research institutions across the country in 2007 and 11 in 2008. | |
| 2009 | Jan: IIVR submits the results of the large scale trails. Due to concerns raised by several stakeholders, GEAC constitutes another expert committee to look into adequacy of biosafety data generated as well as the concerns raised by all stakeholders. |
| Oct 8: Expert-committee 2 submits its report. States benefits of Bt Brinjal far outweigh the perceived and projected risks. | |
| Oct 14: GEAC approves the environmental release of Bt Brinjal containing the event EE1 (with one dissent note from P.M. Bhargava). | |
| Oct 15: Jairam Ramesh announces a nationwide consultation in January and February of 2010 pending a final decision on this issue. | |
| 2010 | Jan 13 to Feb 6: Public meetings were organized on the Bt Brinjal issue. The summary of the consultations is available on the Ministry’s website. |
| Many states announce ban on commercial cultivation of Bt Brinjal including Uttarakhand, Himachal Pradesh and Karnataka. | |
| Feb 9: Jairam Ramesh decides to halt the commercialization of Bt Brinjal. |
Minimum Support Price (MSP) is the assured price at which foodgrains are procured from farmers by the central and state governments and their agencies, for the central pool of foodgrains. The central pool is used for providing foodgrains under the Public Distribution System (PDS) and other welfare schemes, and also kept as reserve in the form of buffer stock. However, in the past few months, there have been demands to extend MSP to private trade as well and guarantee MSP to farmers on all kinds of trade. This blogpost looks at the state of public procurement of foodgrains in India and the provision of MSP.
Is MSP applicable for all crops?
The central government notifies MSP for 23 crops every year before the Kharif and Rabi seasons based on the recommendations of the Commission for Agricultural Costs and Prices, an attached office of the Ministry of Agriculture and Farmers’ Welfare. These crops include foodgrains such as cereals, coarse grains, and pulses. However, public procurement is largely limited to a few foodgrains such as paddy (rice), wheat, and, to a limited extent, pulses (Figure 1).
Figure 1: Percentage of crop production that was procured at MSP in 2019-20
Sources: Unstarred Question No. 331, Lok Sabha, September 15, 2020; PRS.
Since rice and wheat are the primary foodgrains distributed under PDS and stored for food security, their procurement level is considerably high. However, the National Food Security Act, 2013 requires the central and state governments to progressively undertake necessary reforms in PDS. One of the reforms requires them to diversify the commodities distributed under PDS over a period of time.
How does procurement vary across states?
The procurement of foodgrains is largely concentrated in a few states. Three states (Madhya Pradesh, Punjab, and Haryana) producing 46% of the wheat in the country account for 85% of its procurement (Figure 2). For rice, six states (Punjab, Telangana, Andhra Pradesh, Chhattisgarh, Odisha, and Haryana) with 40% of the production have 74% share in procurement (Figure 3). The National Food Security Act, 2013 requires the central, state, and local governments to strive to progressively realise certain objectives for advancing food and nutritional security. One of these objectives involves geographical diversification of the procurement operations.
Figure 2: 85% wheat procurement is from three states (2019-20)
Sources: Department of Food and Public Distribution; PRS.
Figure 3: 76% of the rice procured comes from six states (2019-20)
Sources: Department of Food and Public Distribution; PRS.
Is MSP mandatory for private trade as well in some states?
MSP is not mandatory for purchase of foodgrains by private traders or companies. It acts as a reference price at which the government and its agencies procure certain foodgrains from farmers.
In September 2020, the central government enacted a new farm law which allows anyone with a PAN card to buy farmers’ produce in the ‘trade area’ outside the markets notified or run by the state Agricultural Produce Marketing Committees (APMCs). Buyers do not need to get a license from the state government or APMC, or pay any tax to them for such purchase in the ‘trade area’. These changes in regulations raised concerns regarding the kind of protections available to farmers in the ‘trade area’ outside APMC markets, particularly in terms of the price discovery and payment. In October 2020, Punjab passed a Bill in response to the central farm law to prohibit purchase of paddy and wheat below MSP. Any person or company compelling or pressurising farmers to sell below MSP will be punished with a minimum of three-year imprisonment and a fine. Note that 72% of the wheat and 92% of the rice produced in Punjab was purchased under public procurement in 2019-20.
Similarly, in November 2020, Rajasthan passed a Bill to declare those contract farming agreements as invalid where the purchase is done below MSP. Any person or company compelling or pressurising farmers to enter into such an invalid contract will be punished with 3 to 7 years of imprisonment, or a fine of minimum five lakh rupees, or both. Both these Bills have not been enacted yet as they are awaiting the Governors’ assent.
How has MSP affected the cropping pattern?
According to the central government’s procurement policy, the objective of public procurement is to ensure that farmers get remunerative prices for their produce and do not have to resort to distress sale. If farmers get a better price in comparison to MSP, they are free to sell their produce in the open market. The Economic Survey 2019-20 observed that the regular increase in MSP is seen by farmers as a signal to opt for crops which have an assured procurement system (for example, rice and wheat). The Economic Survey also noted that this indicates market prices do not offer remunerative options for farmers, and MSP has, in effect, become the maximum price that the farmers are able to realise.
Thus, MSP incentivises farmers to grow crops which are procured by the government. As wheat and rice are major food grains provided under the PDS, the focus of procurement is on these crops. This skews the production of crops in favour of wheat and paddy (particularly in states where procurement levels are high), and does not offer an incentive for farmers to produce other items such as pulses. Further, this puts pressure on the water table as these crops are water-intensive crops.
To encourage crop diversification and thereby reduce the consumption of water, some state governments are taking measures to incentivise farmers to shift away from paddy and wheat. For example, Haryana has launched a scheme in 2020 to provide Rs 7,000 per acre to those farmers who will use more than 50% of their paddy area (as per the area sown in 2019-20) for other crops. The farmers can grow maize, bajra, pulses, or cotton in such diversified area. Further, the crop produce grown in such diversified area under the scheme will be procured by the state government at MSP.
