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‘More Efficient Trading System Can Substitute The Middlemen’

Commission agents can be exploitative, but they also provide services to farmers, says economist Abhijit Sen.

‘More Efficient Trading System Can Substitute The Middlemen’
Photograph by Tribhuvan Tiwari
‘More Efficient Trading System Can Substitute The Middlemen’
outlookindia.com
2017-06-24T11:03:23+05:30

Commission agents can be exploitative, but they also provide services to farmers, says economist Abhijit Sen, a former member of the erstwhile Planning Commission. He tells Bula Devi about ways to smoothen the chain between farms and markets.

Is the MSP fixing mechanism flawed?

The most common grievance of farmers against MSP (minimum support price) levels fixed by the CACP (Commission for Agricultural Costs and Prices) is that the price falls below the cost of production. What CACP does is to set MSP at such a level that it is likely to be higher than the paid-out cost with most farmers and higher than the full cost of C2 (cost of cultivation) that includes imputed cost of land, labour and capital for relatively efficient farmers.

Since the CACP recommendations are based on projections from survey averages, the MSP, for some farmers, will inevitably be less than actual cost. That is why we often hear calls to implement the M.S. Swaminathan Commission-set MSP at 50 per cent above C2. The real problem with MSP, how­ever, arises in its non-implementation. The CACP works only in those cases such as rice and wheat in Punjab and Haryana where there is an agency such as FCI that has an assured market through the PDS (public distribution system). Any plan to extend MSP to other crops and regions requires good infrastructure.

Shouldn’t we enforce an MSP regime for fruits and vegetable?

Fruits and vegetables are perishable commodities. It is much more difficult to do this since infrastructure required for their storage would be of high cost.

Why should artiyas be an institution by law? Why even the FCI buys from them?

Artiyas are commission agents, many of whom are moneylenders too. They are ­often exploitative, but...

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