Indian farmers get govt offer that promises about support prices on corn, cotton, pulses
Business
The farmer unions said they would decide on the proposal within a day or two
MUMBAI (Reuters) – India has offered guaranteed support prices for pulses, corn and cotton in a bid to break a deadlock with protesting farmers, Trade Minister Piyush Goyal said after week-long clashes with security forces keeping the farmers out of the capital.
Teargas and barricades were used to deter the farmers, who form an influential voting bloc, months ahead of a general election due by May, in which Prime Minister Narendra Modi seeks a record third term.
Sunday's comments followed marathon talks with farmers' unions after the farmers, who are demanding a minimum support price for their produce, were halted at a distance of about 200 km (125 miles) from New Delhi.
Goyal said the government had proposed five-year contracts between cooperative societies it promotes and farmers who diversify their crops to grow toor dal, urad dal, masoor dal and corn, for the purchase of such crops at a minimum support price.
"These organisations will buy the produce and there will be no limit on quantity," Goyal told reporters in the northern city of Chandigarh, adding that a similar price guarantee would also be offered to farmers who diversify and produce cotton.
The farmer unions said they would decide on the proposal within a day or two, after conferring among themselves to reach a consensus.
Police have used tear gas and barricades to stop thousands of farmers from marching to New Delhi to press their demand that the government set a minimum price for all their produce to ensure their livelihoods.
WHY ARE FARMERS PROTESTING?
Farm union leaders are seeking guarantees, backed by law, of more state support or a minimum purchase price for crops.
The government announces support prices for more than 20 crops each year to set a benchmark, but state agencies buy only rice and wheat at the support level, benefiting around just 7 per cent of farmers who raise those crops.
State agencies buy the two staples at government-fixed minimum support prices (MSPs) to build reserves to run the world's biggest food welfare programme that entitles 800 million Indians to free rice and wheat. This costs the government $24.7 billion annually - its largest outgoing subsidy.
In 2021, when Modi's administration repealed the farm laws after India's longest farmers' protest in years, the government said it would set up a panel of growers and government officials to find ways to ensure support prices for all produce.
Farmers accuse the government of going slow in fulfilling that promise.
Farm policy experts argue that buying all farm produce at state-set minimum support prices is economically unviable.
India's farmer protests coincide with similar demonstrations by their counterparts in Europe, but, other than rising cultivation costs, the concerns raised by European and Indian farmers are different.
While Europe's farmers are protesting the European Union's drive to fight climate change, among other issues, Indian growers are more focused on state-set assured prices [MSPs] for their crops.
DO FARMERS HAVE OTHER DEMANDS?
They also want the government to honour a promise to double their incomes, complaining that costs of cultivation have jumped over the past few years while incomes have stagnated, making farming a loss-making enterprise.
In 2016 Modi's government pledged to step up investment in rural development, aiming to double farmer incomes by 2022.
Farmers also insist that the government ensure at a least 50 per cent profit over their overall cost of production.
They have further asked the government take action against a federal minister whose son was arrested during the 2021 protest on accusations he ran over and killed four protesting farmers.
HOW LONG CAN FARMERS SUSTAIN PROTESTS AND WHAT CAN THE GOVERNMENT OFFER?
Farmers have time on their side and are in no hurry to head back to the countryside to gather their crops. The new season wheat crop will be ready for harvest only a month from now.
Since 2021, Indian farmers have become adept at reinforcing and maintaining protest tent camps along highways while still bringing their crops to harvest.
To placate protesters, the government might agree to provide them a bonus over and above the minimum support price for 2024. It has fixed this year's minimum support price for wheat at 2,275 rupees ($27.41) per 100 kg, 7pc higher than in 2023.
