A Class-Focused Theory of Minimum Support Price and Agricultural Distress in India

Abstract

Minimum support price (MSP) is posed as a remedial response to the distress condition of Indian farmers. This essay dissects MSP and the debate regarding it from the class-focused theory of surplus labor. The analytical tool of class sets shows the limited scope of MSP compared to the disaggregated nature of the Indian agricultural sector and shows that the MSP policy debate is blind to class questions and their consequences. Bringing in various overdetermining and contradictory effects of class-related production and circulation processes, value theory is applied to unravel the dissimilar crisis conditions of agrarian enterprises. Once MSP is combined with class and other nonclass processes, it follows that the MSP outcome will not have uniform effects across enterprises and will not secure its self-proclaimed objective of redressing farmer distress.

Key Words:

• Class
• Indian Agriculture
• Minimum Support Price
• Overdetermination
• Value Theory

Acknowledgments

I am indebted to my Ph.D. supervisor, Professor Anjan Chakrabarti, for his insightful comments and suggestions. A version of this essay was presented at a conference at Kalyani University.

Notes

1 See “APMCs,” National Agricultural Market website, accessed 24 October 2020, https://enam.gov.in/web/stakeholders-Involved/Apmcs. “[The] Agricultural Produce Market Committee (APMC) Yard/Regulated Market Committees (RMC) Yard is any place in the market area managed by a Market Committee, for the purpose of regulation of marketing of notified agricultural produce and livestock in physical, electronic or other such mode.”

Since the 1960s, agricultural-products markets in India have been regulated under the APMC, which has been enacted by various provincial governments. Following this was the central government’s Model APMC Act of 2003 (also allowing private players, including contract-farming sponsors, consumers, and cooperatives, to set up markets), which was accepted by many regional states, and the newly introduced APMC amendment in post-COVID 2020 (which is not the focus here). Despite its evolution, the basic point remains that the APMC records the agricultural commodities produced in a region and provides that once a geographical area is marked under the APMC, the first sale of these commodities can be conducted by farmers under the aegis of the APMC through the commission agents licensed and set up by the APMC under the act (GOI 2015, 117–21). However, in APMC market yards, farmers can sell their produce both to licensed private traders through an auction process and to government agents against the MSP.

2 See “Procurement,” Food Corporation of India website, accessed 24 October 2020, https://fci.gov.in/procurements.php?view=51.

3 Loan waiving by the Indian state has happened in 1990 and 2008. Regional states, too, have waived loans from time to time.

4 See “Minimum Support Prices (MSP) for Kharif Crops of 2019–20 Season,” Department of Agricultural Cooperation and Farmers Welfare website, accessed 24 October 2020, http://agricoop.nic.in/sites/default/files/MSP_2019-20%20%28English%29.pdf.

5 Initially, the report by the National Commission on Farmers, headed by M. S. Swaminathan, only mentioned that “the Minimum Support Price (MSP) should be at least 50% more than the weighted average cost of production” (GOI 2006, 246). It did not mention which cost should be considered, A2 + Fl or C2. Later on, Swaminathan clarified that by cost of production the report meant C2 cost.

6 I am ignoring here the labor performed and value added in the process of retaining the fertility of the land.

7 See Singh 2020.

8 The class impact of APMC will be examined in section 5.

9 Cullenberg (1992) introduced the concept of class sets; his specification did not, however, consider the performance of surplus as a delineating factor of various social forms of the organization of production. Chaudhury and Chakrabarti (2000) formulated a class matrix that classifies the process of the performance and appropriation of surplus into six different social forms of the organization of production. This essay’s later class-set analyses are developed by combining Cullenberg’s theoretical insight with this class matrix.

10 In the table presented in appendix 2, the columns “Serial No.” and “Eligible for MSP” are not attributes for classification.

11 From a class-focused angle, the ownership of land and the appropriation of surplus from it may not be identical (Chakrabarti and Cullenberg 2003, 49–160). To desist from further complications in this essay, I don’t consider this possibility.

12 The communitic CA class set is common in India, especially for family farms in which one person—say, the male head—is the owner of the land; the relation of patriarchy with ownership of assets, especially land, has been discussed by many Indian scholars. Consequently, this one person, who is also a direct performer alongside other family members, appropriates the surplus by excluding other direct performers (Chaudhury and Chakrabarti 2000). MSP thus recognizes only the owner-appropriator-performer of this class set even as the other performers are deducted from its purview. The gender bias in this nonrecognition by MSP policy is obvious.

13 This is because fixing the MSP requires the cost of inputs, labor power, the return to the production organizer, the interest on working capital, and the rent on leased land, which is in line with the average-cost-pricing mechanism.

14 In addition to SV1 and SV2, marginal farmers sometimes work as part-time agricultural laborers in other enterprises earning a wage, a possibility that we are omitting here.

15 The MSP, as the benchmark price according to our assumption, already includes the notional market rate for trader fees (α), which would otherwise be payable to competing private traders.