Hello, friends! Farmers are protesting on the streets once again and this time their biggest demand is MSP. The legalisation of Minimum Support Price.
"MSP" "Minimum Support Price" "MSP for all crops. " Many news anchors and YouTubers claim that if the government fulfils this demand then it will completely destroy the country's economy. It will cost more than ₹10 Trillion!
What is the truth behind this? Is the demand of farmers right or wrong? Let's understand the reality of the farming industry in today's video.
MRP, or Maximum Retail Price, is the maximum price at which things can be sold in the market. MRP exists to protect consumers and the general public in the country. So that no company or shopkeeper can exploit us.
If there was no MRP, you can imagine how terribly people would have been exploited. If you were in the desert and facing water shortages, someone could try to sell a bottle of water for ₹2,000. If there was a cooking oil shortage in your city, you could be forced to buy cooking oil for ₹1,000 per litre.
Now, in contrast to MRP, the opposite is MSP, that is, Minimum Support Price. The minimum amount that would be paid to the farmers for their crops. The reason remains the same.
So that companies and middlemen can't exploit them. Even if the buyers set up a mafia, the farmer shouldn't be forced to sell onions for ₹2 and garlic for ₹0. 50.
They should have a guarantee of a minimum price. Like MRP, MSP is also very logical, that's why most politicians have always favoured it. Like BJP leader Narendra Modi before 2014.
Listen to what he said. "Minimum Support Price is a headache for every farmer. But for the government, it has become a great way to force their will.
" In one state, the minimum support price for wheat will be something, in the next state, it will be another. In one place, the rate of rice will be something, in another place, it will be something else. But everywhere, the buyer is the Indian government.
"But the farmers don't get the right price. Why? The policy of deciding the price has not been implemented.
" Wow! How well Narendra Modi explained this problem! A big round of applause for him.
And not only the problem, he gives us the solution too. Listen further. "Brothers and sisters, we have stated in our manifesto, that we will decide the MSP based on rules and regulations.
" "That is why we have said that the cost of input for the farmer, water, labour, electricity, seeds, fertilisers, medicines, whatever the cost is, 50% profit will be added to that cost. And that will be the MSP they'll have to sell at. " In India, MSP is issued by CACP, the Commission for Agriculture Costs and Prices.
It is a decentralised agency which was established in 1965. And today, it functions under the Ministry of Agriculture and Farmers Welfare. But the question is, how should the MSP be decided?
How much should the MSP be? In 2002, a committee was formed, the High Level Committee on Long Term Grain Policy, headed by economist Abhijit Sen. This committee said that MSP should be based on C2 cost of production.
But, what does this mean? To understand C2, we need to understand A2 and FL costs first. First comes A2 cost.
This is the cost that farmers have to pay as direct expenses. Farmers buy seeds, fertilisers, pesticides, hire labourers to work in their fields, fuel cost, these are the A2 costs. After this comes the FL cost.
FL's full form is Family Labour. This cost is an estimated value of unpaid family labour. When a farmer works in his field, often his family members help him in farming.
Because his family members invest their time to help him, there should be a labour cost for them too. They could have used this time to do some other job. They missed the opportunity of getting a job.
This is known as Opportunity Cost in economics. So, these were the A2 and FL costs. Today, CACP takes A2 + FL cost to decide MSP and multiplies it by 1.
5. This is how MSP is decided today. But Abhijit Sen's committee said that we need to consider the C2 cost.
C2 refers to the Comprehensive Cost. In C2 cost, not only do we take the A2 and FL costs, but we consider the cost of Owned Capital and the Rental Value of Land. You can understand this better with an example.
Think of a photographer who has his own studio. To carry on his business, not only does he have to spend money to take photos, and to print photos, but also to buy a camera, and even to pay rent the rent for the studio. Like a photographer's studio, a farmer's land has a rental value.
If the farmer owns the land, then it is his capital. And if he doesn't own it, then he pays rent on it. Apart from this, like the photographer's camera and studio lights, a farmer has to buy a tractor and a cultivator.
The farmer doesn't buy a tractor just for fun. A tractor is bought to be used for agriculture. So, shouldn't that cost be taken into account too?
All these are called Owned Capital Assets. And Abhijeet Sen's commission report stated that in C2 cost, we should include the A2 cost, FL cost, and this extra cost. And then make it the new basis for MSP.
Friends, after this, a Swaminathan report was released. In 2004, M. S.
Swaminathan was heading the National Commission on Farmers. You might have heard of him already he was one of the architects of the Green Revolution. Between 2004 and 2006, the Swaminathan Commission released 5 reports.
In total, these reports spanned almost 2,000 pages. On the 246th page of the 5th report, it is written that the MSP should be at least 50% more than the Weighted Average Cost of Production. Now some people get confused that whether the Swaminathan Commission was talking about C2 cost or A2+FL cost.
But if we read the entire report, there is no confusion. Between pages 74 to 84, there's a detailed discussion on how in most of the states, MSP does not even recover the C2 cost. And if this C2 cost is not recovered, then farmers will stop farming those crops in the long term.
This 278-page report is available on the Ministry of Agriculture's website. If you want to read it, the link is in the description below. Economics Professor R.
Ramakumar says that when MS Swaminathan presented this report to the Union Agriculture Minister, the 22nd slide of that presentation clearly mentioned that MSP would be calculated at C2 cost plus 50%. On 28th September 2017, MS Swaminathan tweeted that MSP should be at least C2 + 50% with procurement, storage, and distribution costs included. He went one step further.
He started talking about post-harvest costs too. When farmers store their crops, they will incur storage costs too, we should take those into account. This was mentioned not only in this tweet, but also in the second report of the Swaminathan Commission.
On page 412, it was written that "The CACP should look into the aspects of risk factor, marketing, and post-harvest expenses. " It might feel that he wants to pay a lot of money to the farmers. That our country's economy will crash if we start paying farmers so much.
But think about it. Doesn't every other business in the country run like this? All the costs incurred in running any business are taken into account.
Most companies account for their office vehicles, travel, TV, trolley bags, blazers, networking, tea, snacks, pizza, everything as Company Expenses. So, for farmers to take these four costs into account, what's wrong with that? The input cost of seed, fertilisers, and water, the cost of their family labour, the cost of their capital assets, and finally the marketing and post-harvest expenses.
Swaminathan report mentioned two more interesting things. First, MSP should not only be applied to the government but also to private traders. Whoever is buying directly from the farmers should buy at least at the MSP.
And second, MSP should be considered only as a bottom line. So that no one can buy produce cheaper than it. But when the government buys, they should buy it at the same price as the private traders.
If the market price increases, then the government should pay more. This report even said that the income of the farmers should be comparable to that of the civil servants. Imagine that.
But anyhow, there's no point in talking about it now. We will consider only the C2 + 50% cost. Now the question is, who will support the farmers to get them the right price for their produce?
"I want to free the farmers from government's unfair practices. " Narendra Modi! Not only did he talk about farmers and MSP, he took an oath!
"To improve India's economic standing, we need to first improve the farmers' economic standing. And to that extent, we, the BJP, are here to ask for your blessings. " A big round of applause for him.
Such a talent for putting his point across. Explained the problem in the first 2 minutes and then gave a solution. And what he says next, will bring tears to your eyes.
"Lal Bahadur Shastri used to say, "Jai Jawan, Jai Kisan. "" He said, the number of soldiers who died on the battlefield, more than that, farmers have committed su! cide.
They had to d! e a helpless de@th. And that's why, he addresses the crowd, if India has to change, then India's villages have to change first.
"If India has to change, then India's villages have to change first. " To be honest, friends, I don't have anything left to say. Narendra Modi talked about this in such a great way.
But what happened after this video? The people gave their blessings. In 2014, Narendra Modi became the Prime Minister.
Two years later, he made another big promise. By 2022, when India celebrates its 75th Independence Day, farmers' income will be double. Now some people will say that Modi could not do this because of COVID.
Even though he did his best. But even if we ignore the two years of COVID. If not 2022, then it should have doubled by 2024.
Instead of doubling the farmers' income, instead of giving them the MSP at C2 + 50%, what did the Modi government do? They passed 3 black laws. The 3 Farm Laws.
I had made videos on this before, when these laws were passed. In one video, I showed you how unconstitutionally they passed the bills in the Parliament. But the second problem was, these bills were actually favouring the corporates over the farmers.
It's not that before the laws were introduced, the farmers couldn't enter into contract farming with the corporates. Obviously, they could. But the provisions in those 3 Farm Laws was basically like telling the corporates that they could buy, sell, and set up markets arbitrarily.
Government markets would be taxed, but there would be no taxes on private markets. What was an unfair practice before, corporates could now begin hoarding, raise the prices artificially, no reins on corporate actions. Almost in every aspect, large corporate companies were given an advantage over the farmers.
Last year in August, a report was published in the Reporters Collective, which revealed some interesting facts about these farm laws. It was revealed that a man named Sharad Marathe, had written a letter to the then Vice Chairperson of Niti Aayog, Rajiv Kumar. They knew each other before.
This letter talked about the need to introduce market-driven agriculture business model in India. Look at Niti Aayog's office memorandum from 16th October 2017, It talks about Sharad Marathe's concept note. It was suggested that Niti Aayog set up a task force for this.
And guess what? A task force was set up. Who was on that task force?
Sharad Marathe himself. Apart from this, corporations like Adani Group, Patanjali, Big Basket, Mahindra Group, and ITC, but there were no farmers on this task force. In fact, forget about any farmer, no farmer organisations or economists were on this task force.
The next report tells us how Adani Group's companies wanted the Essential Commodities Act to be repealed. Because this Act prohibited companies from hoarding. Why did Adani Group want to have this act repealed?
Perhaps, this is connect to an old event. Pulse Scam from 2015. "In April this year, the price of Arhar Dal (pigeon pea) starts spiking all of a sudden.
The dal which was available in the market for less than ₹70, started costing more than ₹200. " In 2015, the pulses reached ₹200 per Kg. The government carried out raids 6,077 raids in total.
More than 70,000 tonnes of pulses were seized, which were being illegally hoarded. Who was benefiting from this? Look at this report in Business Today.
The Competition Commission of India raided the offices of Glencore, Export Trading Group, and Edelweiss Group. When an income tax probe was conducted, it was found that Glencore, Edelweiss, and ETG were the major players in this Pulse Price Rigging case. And finally, look at this EPW report.
Glencore had investments in the ETC group's ETC Agro Processing (India) Private Limited. And Adani Group was connected to Glencore through a joint venture, ChemOil Adani Private Limited. So, it's quite simple, friends.
When lentils were being sold for ₹200 per kg, the common man was suffering. The farmers were not benefiting, but some corporate companies in the middle were benefiting. And what should the government have done in such a case?
Should the anti-hoarding laws have been made stricter? Or should it have been relaxed to make it easier for companies to hoard? Obviously, they should have made it stricter.
Instead, the government introduced these three farm laws. Some people tried to justify the farm laws by saying that, the Swaminathan report mentioned the need to liberalise the agriculture sector. To bring in some market reforms.
This is true. If you read the Swaminathan report, it is written on page 31 of the 5th report, that the role of State APMC's needs to be reviewed. We need to move towards a single Indian market.
Even while bringing farm laws, the government had said One Nation, One Market. But the problem lies in the details. Well, the marketing terms can be contorted in any manner.
*The devil is in the details* But the MSP mentioned in the Swaminathan report the C2 + 50% formula, they were not included in the farm laws. Friends, do you know the status of MSP implementation today? According to the Shanta Kumar Committee appointed by the Central Government, only 6% of farmers get the benefit of MSP.
Some other reports state that 6% is an underestimate, but let's believe Shanta Kumar, who is a BJP politician and a former Chief Minister of Himachal Pradesh. In 2020, he told The Print that only the elite 6% of farmers get the benefit of MSP, and they are the ones opposing the farm laws. This is true to some extent.
Most of the farmers who are protesting today are from Haryana, Punjab, and some are from Western UP. Why is this? Think about it yourself.
Farmers can be grouped into two. Something is being snatched away from one of the groups. The one that benefits from MSP now, but will soon lose the benefit.
Will they protest? Or the other group of farmers, who never benefited from MSP? Take the example of Bihar.
In 2006, Bihar abolished the APMC Act. What did the farmers of Bihar get from this? This report tells us that between 2007-08 and 2016-17, in these 10 years, there was not a single season where Bihar's farmers could sell at a price higher than the MSP.
The report of 2018 shows that farmers in Bihar had to sell wheat at a price lower than MSP. A 2020 study shows that Punjab's farmers get a 30% higher crop price in comparison to Bihar's farmers, only because of MSP. So the rest of the farmers who are not protesting are in even worse situations.
Ideally, the remaining 94% of the farmers should also be brought under provision of MSP. But what did the government try to do? It tried to take away MSP from the few who were getting it.
That's why 3 years ago, the farmers' protest was on a large scale. The protests went on for a year. Around 600-700 people lost their lives in those protests and after that, those farm laws were, thankfully, repealed.
But what about now? Since the protests began again, it was for the original demand for the promise made by Narendra Modi in 2014. MSP's legal guarantee, for farmers to get a fair price.
If Narendra Modi demands MSP, it's alright. But if farmers demand it, it somehow becomes wrong. *There is a limit to hypocrisy* Look at this article from 20th February.
The government has banned more than 177 social media accounts just because they were talking about farmers' right. When these accounts were banned, Twitter came out with a public reply. That they banned the accounts on the orders of the government, even though they acknowledged that the government's actions were wrong, since it goes against freedom of expression.
Kisan Ekta Morcha had 500,000 followers. It's been banned for the last 2 years. It was banned during the last farmers' protest.
On Twitter, many journalists and users say that whenever they tweeted in favour of farmers, the government banned their accounts. And when, in my videos, I talk about our country moving towards dictatorship, some people come at me to say that the country is still a democracy. Tell me, in which democracy have you heard of people speaking in favour of farmers on social media, having their social media accounts banned on a mass scale?
I have not seen this happening in any democracy. But here I would like to give you a solution. To bypass the bans on these accounts.
This can be done by using a VPN. You can download any VPN app on your phone and with it, you can spoof your location. Because the government can ban accounts only within India, not outside India.
You can change the location of your phone through VPN. You can set the location to any place outside India. USA, Canada, Australia, Europe, anywhere.
And you will be able to see the blocked accounts even if you are in India. In my opinion, NordVPN is one of the best VPN apps. It has more than 6,000 servers in 67 countries.
The best advantage of this is that no matter which country you go to, you can bypass any local restrictions in that country. The Chinese government does this a lot. In China, apps like Facebook and YouTube are banned.
But they can access these by using NordVPN. On top of it, it also protects your online privacy because it hides your IP address. And their latest feature is that they provide a virtual server even in India.
So, people living outside India can now spoof their location pretending to be in India. Since NordVPN has sponsored this video, you will get a huge discount plus 4 additional months for free if you use my link, nordvpn. com/dhruv You can find the link in the description below.
It's risk-free. Because of NordVPN's 30-day money-back guarantee. So, you can try it by going to NordVPN.
com/Dhruv Now, let's get back to the topic. Today, in North India, what is the economic viability of farming, let's understand it with a real-life example. In my family, among my relatives, many are still engaged in farming.
So, the example I will show, is prepared with the information given by my uncle. I talked to him in detail and understood the exact expenses on everything and the profit he gets. You can see this Excel file with calculations on screen.
This shows the economic viability of millet farming in Haryana. The second chart you are seeing basically divides everything into two parts. On the left side, if you farm like a business, you rent land and hire people to work in your fields, in such cases, the biggest expense you will bear is of manpower at 57%.
Tractor rent is 7% and land rent is 31%. In this case, you will incur a loss of around ₹20,000 per acre. So, this business model is a failure.
The second case is when, you own the land and you are farming it yourself, then the biggest expense is water and seeds. In such cases, you can earn a profit of around ₹34,000 per acre. This is for a year.
But if a farmer has to manage his family's expenses respectively, then ₹34,000 in a year is absolutely nothing. Here, he should make at least ₹2 lakh in annual profits. So, even in the second case, for this business model to work, a farmer should own at least 3 acres of land.
Looking at this, you should get an idea of how difficult farming is today. This calculation was for millets. But this profit margin increases for rice crops.
In this case, as you can see on the screen, the profit per acre is ₹48,000 per year, if the farmer owns the land. And if it is done as a business, by taking the land on lease, it is possible to make some profit. Approximately ₹3,000 per acre per year in profits.
Two things are clearly evident with this. First, farmers who own less than 3 acres of land find it extremely difficult to survive. This is why in many states, farmers have given up farming and now work as labourers or are unemployed.
Only the farmers who own a lot of land are able to earn a good profit. Second, this shows the importance of MSP. Looking at the market price, if grains like millet are not profitable for the farmers, then farmers will not grow millet.
Only those grains will be preferred, that can bring them higher profits, leading to environmental damage. More water will have to be used and our health will suffer too. Because grains like millet are actually better for health, compared to rice and wheat.
It is equally important to mention that according to the Swaminathan report, MSP was not the only safety net for farmers. That report also mentioned that to empower farmers, we need to build more than 50,000 farm schools all over the country. Farmers should be taught new ways of innovation.
Knowledge should lead their empowerment. The second report of the Swaminathan Committe stated that villages should have food grain banks to prepare for natural calamities. We saw the COVID-19 pandemic, and how there were some people who starved to de@th.
M. S. Swaminathan was a visionary man.
He knew that any natural calamity could happen at any time, and food grain banks are essential to protect ourselves from it. In his report, he appreciated Odisha's culture. In Odisha, it is cultural to see seed banks in villages.
It is actually the Ministry of Agriculture's job to help in the establishment of rural godowns, warehouses, and coal storage. And then the use of this infrastructure should be subsidised for hill farmers. But, oh no!
If this happens, how will PM Modi's friend Gautam Adani run his business? In a previous video, I talked about how in 2021, there was an incident where Gautam Adani's company paid only ₹12 per kg of apples. It was lower than the cost of production.
The maximum that their company paid was ₹72 per kilo for premium 100% colour apples. And these apples were later sold for ₹250 per kilo in the market. A farmer, Dimple Panjta, told The Wire how Adani had bought A-grade apples for ₹65 per kilo in 2011.
Ten years later, they paid only ₹7 per kilo more to buy those apples. Why is this so? Because, according to the Swaminathan report, the sufficient cold storage facilities that were supposed to be built for the farmers, were never built.
If the farmers do not have the right conditions for storage, they will either have to sell their produce or else, the apples would rot. Many farmers across the country are blackmailed like this. Dimple Panjta also said that his NGO found out how Adani was sold the land at dirt cheap prices, in many places in the Shimla district, to build three cold storage centres.
Now can you understand the struggles faced by the farmers in our country? Today, the government has awarded M. S.
Swaminathan with a Bharat Ratna. But if a farmer talks about implementing the Swaminathan report, then their voice is suppressed. They are attacked with tear gas.
And what does the media do in all this? The media tries to defame the farmers. These TV news anchors spread propaganda against the farmers.
Fake news about them being Khalistanis, and traitors are run. Sometimes they claim that the farmers' demand will be the end of the Indian economy. I will talk about this in a moment, but think about it.
When the farmers are not actively protesting, how many times does the media talk about the farmers? When the farmers commit su! cide every day, when they are forced to sell onions for ₹2 per kilo, how many debates are organised by these news channels?
YouTuber Ramit Verma analysed 202 debates on four Hindi news channels. Aaj Tak, News18, Zee News, and India TV out of these 202 prime-time debates how many debates were on farmers and the unemployed youth? Zero.
Absolutely zero. Agriculture expert P. Sainath says that 69% of our country's population still lives in villages.
But what is the share of news from rural India on the front page of newspapers? Only 0. 67%.
During the last farmers' protest, 5,072 news stories were published in 5 months. Out of those, only 0. 7% news stories were about the increasing cost of production.
Only 27% even mentioned the demand for MSP. So when farmers are dying or going through rough times, the media remains silent. But as soon as they raise their voice to get an MSP, a minimum price for them to barely live on, these TV channels begin their propaganda.
One YouTuber said that if the government gave in to the farmers' demands and implemented MSP, then it will cost us ₹10 Trillion! Another said it would be ₹18 trillion. They lie so much that the news article they use while lying, catches them in their lie in the same second.
"Rs 10 lakh crore [₹10 Trillion] is misinformation" First, the MSP that is being given now and the new MSP that is demanded, only the difference between the two should be considered to calculate the extra money spent by the government. According to a CRISIL study, which examined 16 out of 23 crops with an MSP, they estimate that the real cost of legalising MSP will be only around ₹210 billion for the marketing year 2023. Second, agriculture expert Devinder Sharma states that the government doesn't buy everything from the farmers.
The government buys produce on MSP only when the market prices crash. The main burden of buying at MSP will be on the private players. According to the Swaminathan report, MSP should be applied to private companies as well.
So if someone has to bear the expenses, it is the middlemen, corporate companies who are already earning millions. And what is the issue with them paying a minimum support price to the farmers, when similar laws already exist in other industries? When a company hires an employee, does the minimum wage law apply or not?
Similarly, when a company buys produce from a farmer, a minimum support price law can be applicable. Now, someone might say that this goes against the principles of the free market. How can a government impose such regulations?
We should have a free market. But I would like to ask you, when Adani buys apples for ₹12 per kg from the farmers, is this a free market? When rules are changed and 6 airports are given to Adani on a serving tray, is this a free market?
The white revolution in India didn't happen because of the free market. It happened due to the Government's protectionism. It happened because of the milk cooperatives.
I talked about this in the video on Amul. People hear the phrase 'free market' and start using it. Before using such heavy words, people should understand the philosophy of Adam Smith.
David Ricardo, Labour theory, Karl Marx, John Maynard Keynes. Only after understanding these, should one make an opinion about what free market is and what it is not. You don't have to understand all these complexities.
Just watch this video. "I bought this for ₹25, there's 100 grams of corn. How much did the farmers make?
If they sell 100g of corn for ₹25, they should have been insanely rich. But no, that doesn't happen. The reality is different.
" This is such a simple concept shared by Facebook user Priyanka Singh. She calls herself a farmer's daughter. She bought a 100g packet of sweet corn.
It was priced at Rs. 25. This means that 1 kg of sweet corn costs ₹250.
Now, how much does a farmer get out of this ₹250? We discussed MSP in this video. If MSP is applied, the farmer will get ₹21 per kg.
Out of ₹250, we are talking about only ₹21 per kg. Even after implementing MSP, the farmer will get only this amount. That is, the middleman will still keep about ₹230 out of it.
Is it wrong for the farmer to get even this minimum price? It's your turn, share your opinion in the comment below. If you liked this video, then watch this video too, in which I have explained how the government is manipulating the laws for other industries, just to benefit their crony capitalist friends.
It might be shocking for you. Click here to watch it. Thank you very much!
