Minimum support prices (MSP): For whom and for what?

Every year we see news of increase in government announced Minimum Support Prices (MSP) and how the MSP benefits farmers get a reasonable income from their production.  We also hear about complains by farmers about how low the MPS is.  This year was no exception.

What is MSP?

The MSP and the government system of foodgrain procurement are all part of the 1960s green revolution policies aimed at achieving food security for the country.

 As part of these policies, the government created a system of food grain procurement for multiples reasons:

  • Maintaining reserve stocks of food (national food security)
  • Providing price support to farmers by declaring, and procuring at, ‘minimum support price’ for various commodities
  • Selling the grain at subsidized rates for those who cannot afford it


The MSP is calculated by the CACP (Commission for Agricultural Costs and Prices), based on estimate of the average costs of production of each commodity and a desired farmer profit.  The MSP is declared for 24 commodities, for Kharif and Rabi seasons.

The MSP is simply the recommended price for the government to buy produce at.  Over the years, the nominal MSP has increased for all produce, but real MSP (inflation adjusted) have varied quite a bit.

MSP real over decades

How much does the govt. procure?

If the MSP is intended to provide reasonable income to farmers, such a system would work only if the govt. directly procures the majority of the produce.  Of all the 24 commodities, government procurement is greatest for wheat and rice.  GOI currently procures about 30% of all wheat and rice produced in the country (for market and subsistence) and about 6-7% of other commodities.

Who benefits from MSP?

The government’s procurement operations concentrate on a few crops and a few states. For paddy, about 50% of the total paddy procured for the central pool came from three states: Punjab, Andhra Pradesh and Telangana.  For wheat, about 60-65% is procured just form Punjab and Haryana. Even within these states, procurement takes place only in a small number of districts.  Strong lobbies (e.g. wheat and rice in Punjab and sugarcane farmers in Maharashtra) also influence where and how much procurement takes place. (For more details on procurement, see Pocketbook of Agricultural Statistics 2016).

In the case of oilseeds and pulses, in principle the government is supposed to procure these commodities when market prices crash. However, the quantity procured as a percentage of the marketed surplus is usually negligible.

As the govt. procurement is concentrated at a few centres, it requires farmers to have transport facilities to reach the procurement centres. There are sometimes delays in govt. procurement which makes it difficult for small and marginal farmers to wait for sale of their crops. In districts where a large proportion of production is procured by the government, the MSP can also affect the overall market prices at which the traders buy produce, due to competition from govt. agencies.

So direct procurement benefits only a small percentage of farmers because

  1. procurement is concentrated in some states and districts, e.g. Punjab, Haryana, AP,
  2. while MSP is set for 24 commodities, the government procures mostly wheat and rice
  3. most of the MSP procurement by the govt. happens from medium to large farmers


In fact, in 2015, a High Level Committee on Reorienting the Role and Restructuring of Food Corporation of India estimated that only about 6% of farmers benefit from the MSP.  This is also evident from various data from the NSSO, as below.

MSP procurement

So the next time we see a lot of debate over MSPs, it would be useful to remember that currently it benefits only 6% of farmers. But if the region, crop, and land holding bias of MSP could be fixed, MSP could provide much needed income assurance and risk reduction for the most vulnerable farmers .



  • Kannan 2015. Trends in Agricultural Incomes: An Analysis at the Select Crop and State Levels in India. Journal of Agrarian Change. 15(2)
  • NSS Report 473 Statement 3.12b
  • Pocketbook of Agricultural Statistics 2016, Table 9.2
  • Report of the High Level Committee on Reorienting the Role and Restructuring of Food Corporation of India (“Shanta Kumar Committee Report”). January 2015. pp 12-13
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Tech neutrality (or not) of Facebook

A while ago, I wrote a post about the myth of tech neutrality.  Here I’m sharing link to a long article from Wired about Facebook and it’s own slow realization of the same:

It appears that Facebook did not, however, carefully think through the implications of becoming the dominant force in the news industry. Everyone in management cared about quality and accuracy, and they had set up rules, for example, to eliminate pornography and protect copyright. But Facebook hired few journalists and spent little time discussing the big questions that bedevil the media industry. What is fair? What is a fact? How do you signal the difference between news, analysis, satire, and opinion? Facebook has long seemed to think it has immunity from those debates because it is just a technology company—one that has built a “platform for all ideas.”

This notion that Facebook is an open, neutral platform is almost like a religious tenet inside the company. When new recruits come in, they are treated to an orientation lecture by Chris Cox, the company’s chief product officer, who tells them Facebook is an entirely new communications platform for the 21st century, as the telephone was for the 20th.

Over time…

…WHILE FACEBOOK GRAPPLED internally with what it was becoming—a company that dominated media but didn’t want to be a media company—Donald Trump’s presidential campaign staff faced no such confusion. To them Facebook’s use was obvious. Twitter was a tool for communicating directly with supporters and yelling at the media. Facebook was the way to run the most effective direct-­marketing political operation in history.

The supposedly neutral “platform” was actually enabling certain kinds of use:

… [security researcher Renee] DiResta  published an article comparing purveyors of disinformation on social media to manipulative high-frequency traders in financial markets. “Social networks enable malicious actors to operate at platform scale, because they were designed for fast information flows and virality,” she wrote. Bots and sock puppets could cheaply “create the illusion of a mass groundswell of grassroots activity,” in much the same way that early, now-illegal trading algorithms could spoof demand for a stock. …

THE way the Russians used the platform was neither a surprise nor an anomaly. “They find 100 or 1,000 people who are angry and afraid and then use Facebook’s tools to advertise to get people into groups,” he says. “That’s exactly how Facebook was designed to be used.”

And even as the world realized Facebook (and fake news’) role in 2016 US Presidential election, the company was slow to come to terms with it:

…For the first time, insiders really began to question whether they had too much power. One employee told WIRED that, watching Zuckerberg, he was reminded of Lennie in Of Mice and Men, the farm-worker with no understanding of his own strength.

The supposedly neutral “platform” was actually enabling certain kinds of use:

… [security researcher Renee] DiResta  published an article comparing purveyors of disinformation on social media to manipulative high-frequency traders in financial markets. “Social networks enable malicious actors to operate at platform scale, because they were designed for fast information flows and virality,” she wrote. Bots and sock puppets could cheaply “create the illusion of a mass groundswell of grassroots activity,” in much the same way that early, now-illegal trading algorithms could spoof demand for a stock. …

THE way the Russians used the platform was neither a surprise nor an anomaly. “They find 100 or 1,000 people who are angry and afraid and then use Facebook’s tools to advertise to get people into groups,” he says. “That’s exactly how Facebook was designed to be used.”

The way technology is designed, the way its algorithms function, impact what gets ‘rewarded’ and grown:

“If we just reward content based on raw clicks and engagement, we might actually see content that is increasingly sensationalist, clickbaity, polarizing, and divisive,” she says. A social network that rewards only clicks, not subscriptions, is like a dating service that encourages one-night stands but not marriages.


The past year has also altered Facebook’s fundamental understanding about whether it’s a publisher or a platform. The company has always answered that question defiantly—platform, platform, platform—for regulatory, financial, and maybe even emotional reasons. But now, gradually, Facebook has evolved. Of course it’s a platform, and always will be. But the company also realizes now that it bears some of the responsibilities that a publisher does: for the care of its readers, and for the care of the truth. You can’t make the world more open and connected if you’re breaking it apart. So what is it: publisher or platform? Facebook seems to have finally recognized that it is quite clearly both.


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The myth of tech neutrality

In my class, I sometimes like to show students a disposable plastic water bottle, one that is so thin that just holding the empty bottle dents it.  I ask them whether a plastic water bottle represents technology. Slowly but inevitably we conclude that it is – perhaps not a particularly advanced one by modern standards, but certainly one that changed how humans transport and consume water and other liquids.

Next, I show them another water bottle: One made of steel. I ask them, whether technology is neutral?  Do these water bottles assume different lifestyles?  One or two students will point out the obvious – that one is intended for reuse while the other isn’t.

That is usually a good entry point for a discussion on the assumptions underlying our use of technology – each product assumes certain lifestyles and what software designers call “use cases”.  A thin plastic water bottle assumes a single use scenario while a steel one imagines that the user will carry such a bottle with her everywhere she goes and that there will be clean water available to refill as needed.

I ask them the same question about apps, cars, and public transport – are these technologies neutral?  It takes a while for students to realize that in each of these cases a certain type of user has been imagined.  Even after 100 years of car design & manufacturing experience, car-designers haven’t made cars which meet women’s need to put their handbags somewhere within reach.  Thousands of years of clothing design has not made designers realize that women need pockets as much as men do.  Apple’s health app, when first released, did not include the one thing every adult woman tracks – her menstrual cycle.  And that’s just a shortlist of issues from a gender perspective.  One could add even more problematic issues relating to usability of products for those with physical disabilities.

These “technologies” which we take for granted aren’t neutral; they are manifestations of the imaginations of their designers – in terms of who will use them, what their lifestyle is (or will/ should be).  The designers of a kitchen assume a “standard” height for cooks.  The designer of a mobile phone assumes that the user is literate.  And the designer of a nuclear bomb assumes that there will be a situation during war where one side will feel that it is justified in killing millions of innocent citizens simply because they are living on the other side of a political boundary.

Recently I listened to a Radiolab podcast on AI and ethics.  They started with the usual trolley problem:  An out-of-control train is hurtling down a track on which 5 workers are working.  The workers will not be able to get out of the way in time.  But you have the option of flipping a lever so that the train is diverted to a different track where one person is standing.  So you have a choice of killing one versus five people.  Most people will select killing one person over five.  To this well-known ethics problem, they added a twist.  Now there is a self-driving car with an AI.  In an unavoidable accident, the AI has to decide whom to kill – one person (its passenger) or five pedestrians.  The situation hasn’t changed, but although in the trolley problem most people want to save 5 people over 1, most buyers of the self-driven car want the car AI to protect them instead of the 5 pedestrians.  Now imagine thousands of self-driven cars making such decisions on behalf of humanity.  Obviously, car manufacturers are going to pay more attention to the needs of the buyer/ passenger and hence the current cars are being designed to save the passenger.

Ask most people if they think technology is neutral and they’ll say ‘yes, it is how one uses it which determines whether it is good or bad’.  Modern technology is so complex that we hardly understand what we are using – whether it is the nuances of facebook feed algorithms, the persistent need to get more ‘likes’ or the ethics principles underlying self-driving cars.  Even non-smart technology like the ubiquitous plastic water bottle surely nudges us towards a different vision of the modern lifestyle than what we might have chosen for ourselves.

When we promote e-learning in school classrooms, we imagine that teachers are unable to teach these subjects effectively, that students can learn equally well from impersonal videos as from human teachers, and that instead of investing in teacher capacity building it is easier, faster and “more efficient” to develop e-content.

When the government imagines a universal Aadhar card linked with social security programs like the PDS, it imagines the need to track and trace all benefits received by its citizens.  Aadhar designers imagine that there are situations where a government needs to identify individuals either for controlling access for certain things or tracking actions.

Rather than assuming that such uses of technology are inevitable, we should pause and think about the direction such technologies are nudging us towards.*

Most people, when they say ‘technology is neutral’, what they really mean is that the science behind the technology is universal.  Broadly defined, technology is the application of scientific knowledge for practical purposes.  While the science of making a plastic water bottle may be neutral, deciding that such bottles represent a desirable lifestyle and therefore must be available cheaply is not. It implicitly privileges the privatisation of drinking water supply over the (harder) work of holding governments’ accountable for ensuring that the water coming out of our taps is potable.

I read with great interest the book “Geek Heresy” by my friend Kentaro Toyama, who makes a very convincing argument that technology amplifies but doesn’t solve underlying processes and realities.  For example, e-education amplifies the inequities related to access to education as does e-medicine.

These days it has become fashionable to invest in agri-tech, mobile-based health services, app-enabled government petitions, etc.  Now that we have reached a point where we hardly ever interact with other people without mediation of technology, it is important to occasionally take stock and reconsider: which technological products represent “use cases” which are desirable (piped water in every home?), which ones should be limited to temporary stop-gap measures until longer-term initiatives can take effect (mobile-health apps?) and which ones should be avoided completely (plastic straws?).

Given the pervasiveness of all kinds of technology around us (when was the last time you touched something not made by humans?), these questions should no longer be decided by product companies but as a society. As one commentator on the Radiolab show said in a colourful way, “I don’t want a 20 year old wearing jeans and sipping coke at his computer deciding for all of us.” I have nothing against 20 year olds – in fact, they are the ones with the burden of solving problems that my generation has created.  But the commentator highlights an important point:  These decisions about technology are ones we must make collectively as a society – whether they are about the use of plastic straws, the ethical principles self-driving cars, the algorithms of Google and Facebook feeds, or Aadharification of social security benefits.

* See for example:

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Fertiliser reform

The government of India spends around 1% of GDP on fertliser subsidies every year.  Given the highly political nature of this subsidy, the government has tried and failed at any kind of reform.  Every year, the Economic Survey includes a chapter on Fertiliser subsidies and points out the various issues.  Leakages are rampant.  Despite subsidies, more than half the farmers in India buy fertilisers at prices higher than the (subsidised) MRP.

India now uses more fertiliser per hectare than the US!  But take this with a grain of salt.  Some of the fertiliser gets diverted as cheap inputs for other industries such as plywood and paint.  Even if we discount for this, India’s fertiliser use is quite high, especially taking into account the fact that about 40% of agricultural farms (by area) don’t use any fertiliser at all. Even self-reported data by farmers points this out (I have written about this earlier).

The Economic Survey points out that response to fertiliser has been decreasing dramatically across the country.  The skewed nature subsidies (much higher on nitrogen than other types of fertilisers), the nutrient balance of Indian soils is now skewed. And, instead of the ratio of NPK (Nitrogen, Phosphorous, Potassium) being 4:2:1, it is now around 8:3:1.

Successive governments have failed to make a dent in any of this, despite knowing full well the issues and the long-term consequences. reports on a recent government initiative, which tried to address some issues through Aadhar + land records + soil quality data.  The idea was to use information about a farmer’s landholding and soil quality, to suggest a recommended amount of fertiliser.  They are now rolling back this effort due to the obvious — farmers want to buy a lot more, and why would any retailer not want to sell a paying customer what he wants?

What is interesting is that the government seems to be going after small fish (the large number of small transactions at point of sale to farmers) but not address diversion of fertiliser at the fertiliser plants.


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Food archaeology

It seems that archaeo-botanists are studying ancient food grains to figure out what climate was like based on stresses on food grains found (e.g. lack of sufficient water).

It seems that “when barley grass gets insufficient water while growing, the proportion of heavier carbon isotopes deposited in its cells will be higher than normal.” Using this in reverse, they can figure out what the local climate was hundreds of years ago.They analyzed grains of barley up to 12,000 years old from 33 locations across the Fertile Crescent. “Riehl found that periods of drought had noticeable and widely differing effects on agriculture and societies in the Ancient Near East, with settlements finding a variety of ways to deal with the problem.”

Read more at:


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GST and small producers

Two days after the GST was announced, a financial planner called me offering to invest in companies supplying branded parts and supplies to consumer goods manufacturers. I was about to reply with the usual “not interested” when curiosity got the better of me. I ended up having a longer conversation with the planner, whom we’ll call Arvind. Arvind’s argument was that GST will make consumer goods companies which make everything from furniture, appliances to toothpase, less willing to buy from informal sector suppliers without GST registration.  They will shift to formal sector suppliers of auto parts, raw materials, textiles, etc.  Therefore, he felt this was a good opportunity to invest in top-tier suppliers in these sectors.

Recent news from informal sectors such as handicrafts or textiles, validates Arvind and his employer’s predictions.

According to the article The GST Regime is Damaging, Not Helping, India’s Crafts Sector  in The Wire:

Artisans who sell across state lines with a turnover under Rs 20 lakhs (2 million) are exempt from filing under GST only if they have a PAN card and send packages through an e-waybill. Yograj [an artisan] has no PAN card and there is no courier in his village that can provide an e-waybill. He usually brings his wares physically with him, and takes the money immediately as he can’t afford to wait for payment. My accountant has asked me to stop working with all artisans who do not have a GST number since it is illegal without all the requirements.


Bhurabhai from Dhamadka, Kutch, who was a village sarpanch, says that almost all printing in Dhamadka is on hold since GST started. Big organisations that sell their hand-printed fabric are no longer buying from printers who do not have a GST number. For a printer to file for GST means that, other than the financial burden of paying an accountant to file for them, they also need to physically go three days in a month to the accountant in a city nearby and waste half a day each time at the very least. Craft in India is gasping to survive and compete with cheaper machine-made goods. With this added burden of GST, we can be sure that most self-employed artisans will be unable to survive in this sector.

An article titled How GST is hurting small businesses in Surat’s textile hub – and spurring a black economy in the Scroll reports on the condition of textile traders post-GST:

In May and June, this reporter saw the traders sitting at desks or on mattresses covered with white cloth, telephones near them. Stacked up in their shops were bales of merchandise. Outside in the corridors, workers from Uttar Pradesh, Jharkhand and elsewhere busily packed finished garments for dispatch.

Things were quieter in early September. The corridors were much less crowded. Even on the street outside, no more than six or so tempos were parked, waiting to be loaded. “There is no business,” said Neeraj Mittal, a trader in his 30s who runs Srutika Sarees. “Orders have dried up.” Srutika’s buyers are based in Maharashtra, he said. They would travel to Surat, buy in cash, and take the garments to sell in their local markets. Those buyers have stopped coming.


According to the managing director of a large sari-manufacturing company in Surat who asked not to be named, local transporters … buy stock in “kuchcha” (without bills) and sell it in neighbouring states. “They have done their setting [with the police],” the managing director said. “They buy stock here at Rs 150 and sell elsewhere for as much as Rs 450-Rs 750.”

So the GST regime has created a black market, and created more opportunities for exploitation of small producers and artisans, rather than doing the reverse.

Update:  Lest anyone think that this is a problem only for handicrafts sector, the Financial Times reports similar distress in small manufacturing.

If a financial Asset Management Company could figure this out in less than 48 hours, it can lead us to only one of two conclusions:  The policymakers understood the implications of the bill on informal sector (comprising >90% of India’s workforce, and ~50% of voters) and went ahead with the bill anyway.  Or, the policymakers didn’t think deeply about the implications before instituting the plan.  Neither of these conclusions increases our confidence in current policy-making mechanisms.

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Online Course on Sustainability in the Indian Context

Whatsapp Tech

After months and months of preparation and production, I’m so excited that this course is ready for launch!  It’s a unique multi-instructor course exploring sustainability ideas and actions in the Indian context.  As the course is designed with weekly faculty interaction and feedback, it’s a ‘closed enrolment’ course with a cap on class size and not an impersonal MOOC.  We’ve already gotten quite a few applications.

Posted in Agriculture and farming, Food and nutrition, sustainability | Leave a comment