Putting this🧵out to clear some misconceptions on #farmerprotest2024 and its demand for a legal backing to #MSP. Will it bankrupt the exchequer? Do only rich farmers benefit from MSP? Will it drive away private buyers?

Illustration: Where the Indian Farmer stands (aside)… from the great R K Laxman Why guarantee a minimum price and why it is important?

Minimum Support Price or MSP is calculated to ensure a reasonable return over cost of production. Making it statutory is a recognition that trade below this minimum price is UNFAIR and EXPLOITATIVE. Think of it as statutory minimum wages which are already in place. A responsible food company, trader and the government are expected to pay this minimum price to the farmer. The government had a stated goal to double farmer incomes— its expected that farmers will expect a fair price.

With a population of over 1.4 billion, food security is too important for India to leave to private markets. When the Ukraine war broke out and pushed wheat prices to record highs, India could tame consumer prices reasonably by using public food stocks, MSP purchases from farmers and export curbs. MSP was critical to the green revolution strategy which pulled India out of a terrible food shortage. It is needed today to guard against future shortages arising out of repeated climate shocks.

A minimum price guarantee ensures that farmers do not lose interest and the country has enough supplies of different food commodities. With regular climate shocks our public stocks are no longer overflowing. Which is why the government had to step in and curb rice and wheat exports. Farmers paid a price for this— they would have earned more if were allowed to supply freely to international markets. They did not hit the streets then. They are doing it now to ensure fair prices in the future.

Do we understand the food we eat? Know it, intimately? The few who do, are making ginormous profits from our ignorance. The state is complicit. We are oblivious. Farmers sell #wheat for Rs21/kg while we buy packaged whole wheat flour @ Rs41/kg. So how is the food processing industry benefiting either farmers or consumers? What explains this wholesale-retail price wedge?

After speaking to farmers in several states, experts and industry insiders, my sense is that a #wheat crisis is imminent for India in the next 4-5 months, or earlier The agri ministry is estimating a crop size of record 111 million tonnes, but actual production is likely to be at least 10% lower due to the March heatwave and also shift in acreage from wheat to mustard

Will the #farmersbill benefit farmers? The short answer is, we don't know yet. Flagging a few gaps here. A thread. With the new set of laws, trade will likely move out of regulated mandis to save on taxes and fees. Will traders pass on their savings to farmers? Looks unlikely.

The raging debate over @RahulGandhi s promised #MinimumIncomeGuarantee is a good sign. Happened due to the hollowness of the empowerment narrative of Modi. In a country where future well-being of a new born is decided by where she is born, the role of welfare state is immense PM Modi tried the market/empowerment route to governance. Eg. Crop insurance for farmers, Skill India.. Most of these programs have failed to bring about real change, so we are back to discussing the role and reach of a welfare state.