A legally guaranteed MSP will not hit exports

By Kavitha KurugantionJan. 23, 2021in Perspectives

Farm shipments form a small part of the total production and operate independently of the support prices regime

Towards sustainable farming

When farmers’ movement in India raises a demand for a legally guaranteed MSP (minimum support price), there is often a counter argument posed about how this would affect India’s agricultural export competitiveness. India’s agriculture exports were estimated at $38.7 billion in 2019, a mere 7 per cent of India’s production. The picture of exports is also one of stagnation. India’s market share in global agri-markets is estimated to be around 2.5 per cent.

Exports, in value, are led by marine items, basmati rice, spices, buffalo meat, non-basmati rice, sugar, raw cotton, castor oil, oilmeals, tea, fresh fruits, coffee, groundnut, fresh vegetables and cashew. The situation with regard to export competitiveness of each of these commodities variable, understandably.

So will we lose our export competitiveness if the MSP is made into a legal right?

To begin with, increased exports from India do not necessarily translate into better prices for farmers in their interfaces wfith markets. For most farmers, therefor, this is a question that is not directly relevant to them. Be that as it may, there are economists and policy-magers who want to raise this question as their main concern with regards to legally guaranteed MSP.

It needs to understood that farmers’ livelihoods don’t depend on global markets primarily, and nor does the agriculture sector itself depend on exports in any major way. Agricultural exports, as a percentage of India’s agricultural FDP, though increasing, is less than 10 per cent.

Read the entire article in The Hindu (published on 22 Jan. 2021)

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