MSP hike fails to cheer farmers, losses still loom large

Television channels and a section of the media have hailed the government’s recent announcement on the Minimum Support Price (MSP) for rabi crops as a festive gesture — a so-called “Diwali gift” to farmers.

On the surface, the timing and presentation of the declaration might suggest generosity. Yet, farmer organisations across the country remain far from pleased. For them, the announcement made on Wednesday, 1 October has exposed once again the gap between political rhetoric and the lived reality of cultivators.

Ordinarily, the MSP for rabi crops is declared a little later in the season — often in the third or even fourth week of October, sometimes spilling into November. This year’s unusually early announcement has been timed to influence the electoral climate ahead of the upcoming Bihar elections. But those who till the soil see things differently.

The cabinet decision increased the MSP of wheat by Rs 160 per quintal, mustard by Rs 250, and sunflower by Rs 600 compared to last year. Numbers such as these are frequently cited in headlines as signs of generosity.

However, leaders like Dr Darshan Pal of the Joint Farmers’ Front point out that the spectacle of an 'MSP hike' is misleading. In his words, “Such announcements are usually designed to earn applause — so that everyone can say farmers have been given a major benefit. But the truth is that farmers end up bearing losses every single time.”

The crux of the dispute lies in how production costs are calculated. Over a decade-and-a-half ago, the Swaminathan Commission — formally known as the National Commission on Farmers — recommended that MSP should be set at 50 per cent above the comprehensive cost of production, a formula described as C2 + 50%.

This formula accounts not just for seeds, fertilisers, labour, and inputs but also includes imputed costs such as the rent of owned land, interest on capital, and depreciation of farm equipment. These, farmers argue, reflect the true economic cost of cultivation.

The BJP government has spoken about adopting these recommendations several years ago, and declared that the Swaminathan formula has been accepted. It was linked to another grand promise — that farmers’ incomes would be doubled within a fixed time frame.

On the ground, little has changed. Instead of C2 + 50%, the Commission for Agricultural Costs and Prices (CACP), which fixes MSP, continues to use the narrower A2 + FL formula. This formula covers paid-out costs (A2) and family labour (FL), but deliberately leaves out land rent, interest on fixed assets, and depreciation. The outcome is predictable: a drastically understated cost of production, which results in lower MSP.

Farmers like Ramandeep Singh Mann, an engineer by training who returned to agriculture in Punjab, have tried to quantify the gap. According to his calculations, based on the MSP figures announced after the cabinet meeting on Wednesday, farmers will actually suffer losses if the Swaminathan formula is considered the benchmark.

Mann’s estimates suggest that the gap between the MSP declared and the remunerative price due under C2 + 50% translates into a loss of Rs 121 per quintal for wheat, Rs 643 for barley, Rs 1,437 for chickpeas, and Rs 864 for lentils. Far from being a festive gift, these numbers highlight what many farmers describe as betrayal.

The picture that emerges is sobering. While the government seeks to project the MSP announcement as a boon, farmers' organisations see it as part of a pattern of deception — grand claims and promises on one side, and quiet erosion of farmer viability on the other.

With input costs steadily rising, the gap between what farmers spend and what they earn continues to widen. And until the Swaminathan Commission’s recommendations are genuinely implemented, the MSP, no matter how early or how loudly declared, will remain less a gift and more a reminder of unfulfilled promises.