Ashok Gulati takes charge of the government’s Commission for Agricultural Costs and Prices (CACP) at a time when farmers’ income and the role this plays in improving production is being debated, following sharp rise in food item prices. In an interview with Sanjeeb Mukherjee and Ajay Modi, he says price policy should focus on helping growers to modernise their practices and not just raising income levels. Edited excerpts:
You are taking over the reins of CACP at a time when farmers’ income and related issues are being talked about a lot. What will be your priorities?
I have been working on the issue of price policy of farm products since the past 30 years (his earlier job was Asia Director of the International Food Policy Research Institute) and my firm belief is that any pricing policy for farmers should be remunerative enough to incentivise them to adopt new technologies. I mean, inter-crop parity, terms of trade, impact of global markets, etc, should all form part of pricing policy, but the main thrust should be to encourage growers to adopt new technologies.
M S Swaminathan says minimum support price (MSP) of farm goods should be cost plus 50 per cent profit for growers. How do you view this?
Any pricing policy should not be viewed only as an income policy. Instead, it should ensure efficient allocation of natural resources. If someone wants to improve incomes, then money should be directly transferred to the farmers, rather than using a pricing policy for this. For example, if we raise the minimum support price of wheat from the current Rs 1,180 per quintal to, say, Rs 2,000 per qtl just to give more incomes to farmers, what will happen to consumers? You have to look at stocking policy, consumer price, etc, before taking a call on this.
You’re suggesting MSPs can’t be raised to market price?
Initially, MSPs were different from procurement price, but that distinction got blurred over time. The idea of MSP should be ensure how it can make agriculture remunerative to farmers, so that it helps him in faster adoption of technologies, not just raise his incomes. It must be borne in mind that our natural resources like land, water, etc, are getting scarce.
A lot of the time, even after the Centre announces an MSP, states come up with additional bonus. Does it distort the signal?
Yes, it sometimes does, but we are in a federal structure and can do little to change that.
A lot of the time, a farmer does not get right price for his produce because of trade bans or stock holding limits. How do you plan to address this?
One of my first priorities will be to make CACP a more diagnostic organisation, so that we can view pricing from all angles. Like, what price would a farmer get if export controls were not there on the product or, say, it does not have any stock limit. I mean, a farmer should get an opportunity cost for his produce. For example, in the case of rice, what should be the price for a farmer if the export ban was not there or, say, the 75 per cent levy system is abolished, or the stock holding limit currently in place in some states is lifted. I mean, in a pricing policy, a farmer should get compensated for all that he is losing because of distorted markets.
How do you plan to execute all these?
I’am having regular interactions with the Indian Council of Agricultural Research, Department of Agriculture and even private players to come out with an agriculture pricing policy which raises production through proper use of technology.