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Situation report in pulses, cotton: The crops in Centre’s MSP proposal to protesting farmers

Context- During the fourth round of talks with protesting farmers, the Indian government proposed a crop diversification plan in Punjab. This plan involves government-backed cooperatives offering five-year contracts to procure five crops – tur (arhar), urad dal, masur (lentil), maize, and cotton – at minimum support prices (MSP). Food Minister Piyush Goyal stated that the National Cooperative Consumers’ Federation of India Ltd (NCCF), the National Agricultural Cooperative Marketing Federation of India Ltd (NAFED), and the Cotton Corporation of India (CCI) would purchase these crops without any quantity limit.

However, the farmers, who have demanded a legally guaranteed MSP for all crops nationwide and the determination of crop prices as per the Dr Swaminathan Commission’s report, rejected this proposal. They announced the resumption of the ‘Dilli Chalo’ protest march at 11 am on Wednesday.

Why is the Centre pushing for crop diversification in Punjab?

  • Over 80% of Punjab’s geographical area (41.17 lakh hectares out of 50.33 lakh hectares) is under cultivation, primarily with rice and wheat. In 2019-20, wheat was grown on 35.21 lakh hectares and paddy on 31.42 lakh hectares of the net sown area.
  • The crops in the Centre’s proposal had smaller shares: cotton (2.48 lakh hectares), maize (1.14 lakh hectares), and pulses (33,000 hectares). Paddy, which requires about 2,500 litres of water to produce 1 kg of rice, has led to significant groundwater depletion, risking widespread desertification.
  • Attempts at crop diversification have not been successful. The area under cotton reduced from 2.91 lakh hectares in 2017-18 to 2.51 lakh hectares in 2021-22, and maize reduced from 1.14 lakh hectares to 1.05 lakh hectares. However, the area under pulses increased from 30,200 hectares in 2017-18 to 62,600 hectares in 2021-22.

Which states are the major producers of the three pulses in the government’s proposal?

  • A few states in India account for half of the country’s total pulse production. Madhya Pradesh, West Bengal, Bihar, and Jharkhand produce 95% of India’s masur.
  • Maharashtra, Karnataka, Uttar Pradesh, Gujarat, and Jharkhand produce 80% of arhar (tur). Madhya Pradesh, Andhra Pradesh, Uttar Pradesh, Tamil Nadu, and Maharashtra produce 75% of urad.
  • Despite this, India relies on pulse imports to meet domestic demand, with a total production of only 27.69 million tonnes in 2021-22. The government aims to achieve self-sufficiency in pulses by 2027 and promotes their production through incentives like higher MSP and procurement initiatives such as the Price Support Scheme (PSS) and Price Stabilisation Fund (PSF).

How much pulses and cotton does the government procure?

  • The Indian government announces Minimum Support Prices (MSP) for 22 crops, but procurement is limited to a few. The Food Corporation of India (FCI) procures cereals, especially wheat and paddy; NAFED procures pulses and oilseeds; and the Cotton Corporation of India (CCI) procures cotton.
  • In Punjab, cotton procurement by CCI has been increasing over the last three years, but overall figures remain low, with Punjab accounting for about 5% of total cotton procurement in the country.
  • In 2021-22, CCI procured a total of 91.90 lakh bales, with the largest share (34.01 lakh bales) coming from Andhra Pradesh. Punjab’s share was 5.36 lakh bales, an increase from 3.58 lakh bales in 2020-21.
  • In 2022-23, NAFED procured 29.64 lakh tonnes of pulses at the MSP under the Price Support Scheme (PSS), benefiting 13.77 lakh farmers, and 57,754 tonnes under the Price Stabilisation Fund (PSF). The largest share of the total quantity procured by NAFED was gram (84.59 lakh tonnes), followed by moong (12.59 lakh tonnes).
  • The Commission for Agricultural Costs and Prices (CACP), which recommends MSPs for various crops, has raised concerns about the procurement of pulses by NAFED. Due to record production of gram and depressed market prices, the government procured about 25.6 lakh tonnes of gram during RMS2022-23 and 22.3 lakh tonnes in RMS2023-24 under PSS.
  • However, NAFED disposes of the stock of pulses in the open market at a price much lower than the MSP, which adversely affects market prices and discourages traders from procuring directly from farmers.
  • The CACP suggests that distributing pulses to households in aspirational districts could improve nutrition and help dispose of stocks without affecting market prices. However, liquidating stocks of pulses procured under PSS remains a challenge for NAFED due to losses incurred in open market operations.

Conclusion- The Indian government’s efforts to diversify crop production and achieve self-sufficiency in pulses face significant challenges. Despite the introduction of Minimum Support Prices (MSP) and procurement initiatives, the majority of cultivation remains focused on wheat and paddy, leading to environmental concerns such as groundwater depletion.

While procurement of certain crops like cotton and pulses has seen an increase, the disposal of these procured stocks at prices lower than MSP adversely affects market prices and discourages direct procurement from farmers. Therefore, innovative solutions are needed to balance the goals of crop diversification, sustainable farming, and fair pricing, while ensuring the welfare of the farming community.

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