MSP increase not enough to make farmers shift from paddy and wheat

Wheat and paddy farmers unlikely to shift to water-thrifty crops without better return

The Centre hiked the minimum support price (MSP) of main kharif crops last week, but the maximum increases were reserved for pulses and oilseeds, in order to encourage farmers to move away from wheat and paddy and opt for pulses and oilseeds instead. 

Data shows that though both the acreage and production of pulses and oilseeds have risen significantly in the last few years, it has not come at the cost of rice and wheat production.

Between 2014-15 and 2020-21 (July to June), when the MSP of paddy (common) was hiked by almost 37 per cent, the acreage under the crop dipped only marginally — by around 2.5 per cent. And while the MSP of wheat increased by 36.2 per cent during the same period, there was a 10 per cent increase in its area under cultivation.

In contrast, while the MSP of chana rose by almost 61 per cent between 2014-15 and 2020-21, the area under the crop rose by almost 36 per cent. Similarly, during the same period, the area under soya bean cultivation increased by nearly 10 per cent on the back of its MSP rising by almost 51.5 per cent.

In other words, though higher MSPs may have encouraged farmers to grow more pulses and oilseeds, there has been no simultaneous shift away from wheat and paddy. 

“Strategy-wise it is good to use the MSP as a tool to encourage farmers to shift from water-guzzling paddy to more in-demand pulses and oilseeds. But experience shows that the shift does not happen so easily as climatic conditions needed for growing paddy are entirely different from that for growing tur or urad,” Pramod Kumar Joshi, former director, South-Asia of International Food Policy Research Institute (IFPRI), had told Business Standard.

Joshi, who recently was part of a three-member panel constituted by the Supreme Court on the controversial new farm laws, explained that while paddy is grown in high rainfall areas or in well-irrigated areas of the country, pulses like tur and urad are grown in areas with less rainfall or poor irrigation.  

“I feel MSP can encourage farmers in areas where pulses and oilseeds are already grown to bring more areas under the crops. But it won’t encourage paddy growers to shift towards these crops as the climatic conditions for the two types of crops are entirely different,” Joshi said.

Experts say that unless backed by strong procurement mechanisms or ready markets, MSPs alone are not enough to encourage farmers to leave cereal cultivation and opt for pulses and oilseeds.

In the past few years, India’s pulses production has risen from a mere 14-15 million tonnes to almost 22-23 million tonnes not just due to higher MSPs, but also because of an assured procurement system by state agencies. 

“The rate of return on investments is by far the most important factor that determines whether a farmer wants to make the switch from paddy and wheat to pulses or oilseeds in a season. If he sees that wheat and paddy gives him better returns as compared to other alternatives being suggested, he will never make the switch, howsoever MSPs are increased,” said Mahendra Dev, director of the Indira Gandhi Institute of Development Research (IGIDR), Mumbai, and a former chairman of the Commission for Agriculture Costs and Prices (CACP).

Dev said that to ensure that the rate of return on investment is higher for pulses and oilseeds as compared to cereals, there should be regular procurements or the markets could give a similar competing price.

“Else, you will only have farmers on the margins making the shift — there won’t be any wholesale transition,” Dev said.

Agreed Tauseef Khan, co-founder and CEO of Gramophone, a farming platform that provides agronomic intelligence to more than 700,000 farmers: “We have seen that in many places farmers decide on their sowing preference based on the price fetched by the crop in the previous year.”

Khan added that while the shift away from paddy and wheat was taking place at a micro level, a more widespread transition would not happen without a higher return on investment in pulses and oilseeds.

Alternatives

In yet another effort to wean farmers away from wheat and paddy, many state governments have now started giving them a per hectare incentive for cultivating crops other than cereals. For example, the Haryana government under its, ‘mera pani-meri virasat’ scheme, has been providing an incentive of Rs 7,000 per acre to farmers who opt for pulses, cotton, maize and horticulture crops. 

Similarly, Chhattisgarh has decided to give a higher input subsidy of ~10,000 per acre to all farmers who shift from paddy to kodo-kutki (traditional millets), sugarcane, maize, soybean, pulses, oilseeds and so on, under its Rajiv Gandhi Kisan Nyay Yojana.

“Per acre incentive is a good step to encourage farmers to shift from cereals. But here, too, unless the remuneration is comparable to or better than what they get from growing cereals, the shift won’t happen in a big way,” Dev of IGIDR said.

The Centre, on its part, has started working on a comprehensive roadmap in consultation with all ministries to wean farmers away from paddy and wheat and move towards pulses and oilseeds.