The ongoing protests by farmers against the government’s wheat procurement policy have triggered a debate.
Some question why the government persists with a controlled wheat marketing system despite its widespread recognition as a failure, particularly in supporting smallholders, who make up over 90 per cent of the total farmers.
It is pertinent to mention that this large-scale procurement, often relying on unsustainable commercial borrowing at high interest, is usually justified in the name of smallholders or national food security, especially when the announced wheat support price exceeds the international price, as in 2024.
Every year, the government’s intervention in wheat procurement begins with announcing the wheat support price. This matter frequently sparks intense controversy, as farmers and the government are often at odds.
Farmers always insist on cost-plus support price, as they have no sensible justification or incentive to grow wheat otherwise. Additionally, they compare the financial returns of various crops and make rational choices based on potential profitability. Their cost structure depends on the prices of agricultural inputs such as fertiliser, diesel, electricity, seed, pesticides, and labour.
Govt’s inability to set a sustainable wheat support price policy due to the cumbersome and corrupt procurement system harms farmers’ profits and national agricultural productivity
The cost of agricultural inputs rises every year, and since farmers sometimes have to buy these inputs over the notified prices — fertiliser is a classic example — they........