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‘Fair’ Price


Everybody wants a raise, regular increases in DA, various kinds of concessions and relief. However, when it comes to paying higher prices for milk, as in recent days, or other agricultural products, a hue and cry is raised, the government put in the dock. Don’t farmers deserve better prices for their products?Should not their products be able to command premium prices for being comparably better in quality?

There are two ways, primarily, by which farmers can get better returns – competitive prices based on market conditions, and increased productivity. Instead of letting the market regulate prices, these are kept deliberately low through a number of subsidies meant primarily for the poor, such as cheap rations at the PDS shops. This overlooks the fact that the farmer is poor, too. Often, many involved in agriculture find it easier to stop working in their fields and work for programmes such as the MGNREGA and other menial tasks, and purchase food from the PDS. Then there is the practice of paying minimum support prices for products, which bleeds government of finances even if there is a bumper crop and prices should be allowed to drop for the consumer and the food processing industry. As has been often seen, the accumulated crop then rots in the godowns, particularly if there is a succession of good harvests.

In the case of sugarcane, for instance, sugar mills are forced to go into bankruptcy as they have to pay a price that is unsustainable. Farmers traditionally get free electricity in some states, while diesel was also subsidised till recently. This meant wasteful practices and lazy farmers, who would turn on the tube wells early morning and go back to sleep, regardless of how much water went into the fields. In the case of sugarcane, this enforced dependence on government largesse meant farmers did not shift to other crops when they should have, had they properly read the market. The farmers are averse to taking risks with new types of products, practices, technologies and commercial structures, preferring the security of MSP. The ceiling on how much land one can own also ensures that the good farmers have a natural curb on how much they can produce, while the bad ones struggle to make a living. No wonder, India’s productivity levels are among the lowest in the world.

It is important, therefore, for government to re- examine the ‘socialist’ model of agriculture production and introduce the best practices from around the world, particularly countries that have competitive and sustainable models. If the farmer gets fair prices for her product, everybody will make money down the line.