Soybean price crash underscore need for a strong MSP guarantee

The crisis in agriculture is not merely about production but about ensuring fair and stable incomes for farmers. Without a legal framework guaranteeing MSP, farmers continue to bear the brunt of price volatility, leading to widespread distress and economic insecurity in the farming community

Soybean prices have crashed. When I say crashed, I don’t mean to say that prices are on a decline. What crash means here is that prices have come down to a level that existed 12 years ago. Against a Minimum Support Price (MSP) of Rs 4,892 per quintal for the 2024-25 marketing season, prices have slumped to about Rs 3,500 per quintal on an average.

And this crash is when the crop harvest is still a month and a half ahead. At this time normally the prices should be ruling high as economists often tell us. In fact, farmers are being repeatedly told not to immediately sell after the crop is harvested, but to hold and store the crop for some time when the prices are high.

That is exactly what Kamlesh Patidar, a farmer from Mandsaur district in Madhya Pradesh, did to his dismay. Wanting to market a part of the stored harvest from last year, he went to sell it in a mandi. The price he was offered – close to Rs 3,800 per quintal -- not only shocked him but made him also realise that prices will remain low in the ensuing marketing season. Angry, he returned back and re-ploughed his standing soybean crop in 10-bighas.

It was only when the video went viral that fellow farmers realised how grim it is going to be in the marketing season ahead. Suddenly, the slump in soybean prices and that too ahead of the crop harvesting season emerged as a serious concern for soybean farmers. In what triggered a chain reaction, reports of several anguished farmers uprooting the crop have poured in. Within a week or ten days, the issue of a crash in soybean prices has turned into a hot potato. Already, processions are being taken out demanding Rs 6,000 per quintal to be paid to soybean farmers. Protests have begun to happen in the soybean belt of Madhya Pradesh.

Before I move any further, please tell me any business that can withstand a price crash similar to what thousands of soybean farmers are faced with. And imagine, a government employee being told that this year they will get a salary based on the pay scale that they were getting a decade ago. The uproar that arises will be difficult to handle.

But when it comes to agriculture, I see a deafening silence all around. It is generally believed that the maddening volatility in prices is a routine phenomenon. So much so, that I find economists refraining from touching on this sensitive subject. They merrily talk of ‘from farm to fork’ - a term coined by the agribusiness industry - but remain conspicuously silent when confronted with innumerable reports exhibiting a reverse phenomenon -- ‘from farm to flop’. And this reminds me when several years back I was speaking at a labour conference in New Delhi, a former Rajasthan Chief Secretary casually remarked something like this: “Oh, you don’t know Mr Sharma. In Rajasthan, if it rains after a drought of two to three years, farmers raise crops that can easily ensure household food security for another three years” It took me some moments to absorb the gravity of the statement, before I asked him: “If it was so easy then why do you have to work so hard as a bureaucrat. You could have just gone back to farming.” And you guessed it right. There was no response to what I had remarked.

Anyway, coming back to soybean, it is important to understand that agriculture in India was (and has) always been seen as an uncertain and risky proposition but the gamble with price volatility has been little understood. What it means for destroyed livelihoods has not very often been discussed and commented upon. Any disaster hitting agriculture (and that includes ‘from farm to flop’) is seen only from the point of view of loss in production and rarely from the hardship that farm families are left to cope with.

Over the years the debate has very conveniently shifted to things like input efficiency, digitalisation, precision farming, satellite imageries and technology adoption as the way to increase farm income. Every technology that is being readied for agriculture, with agribusiness industry lining up the new innovations on its shelves, is being pushed as a panacea for the ills plaguing farming and of course comes with the promise of increasing farm incomes. Not only those who graduate from the business schools, academia, and even most of the senior bureaucrats (with some exceptions) who are engaged with agriculture, cannot see beyond the industry proposals. In fact, as someone said that 90 per cent of the ideas projected before the annual budget presented by the Finance Minister are actually only rephrasing of what the industry wants; similarly in agriculture, much of what is being suggested as the way forward is not very different from what the agribusiness industry has been saying.

If techno-fix is the viable solution, I don’t understand why the average farm income should be at the bottom of the pyramid. While the profits of input providers and even the stocks in share markets have been on an upwards swing, why is it that an average farmer is still struck in poverty?

That’s obviously an uncomfortable question no one wants to answer. Nevertheless, let’s return back to soybean. When Kamlesh Patidar was plying a tractor over his soybean field, what technological inputs could have saved him from destroying the standing crop? Even assuming he had ensured input efficiency and had adopted a plethora of the latest technological tools that are being marketed, would it still ensure a profitable crop for him? I understand that it is advisable to increase productivity, which he in any case was working towards. The Soybean Processors Association of India (SOPA) is in any case aiming to strengthen soybean as a viable crop. It has plans to double the area under soybean from existing 10 million hectares and increase production to 20 million tonnes by 2030. Fair enough, but the bigger issue is what can be done when a price collapse happens.

The soybean price crash has nothing to do with productivity and production. For instance, if it was low production this year, the prices should have been higher and certainly not dropping to such a low level. That is why I have always maintained; the crisis in agriculture is not in a farmer’s field but is outside of his crop field. No amount of Artificial Intelligence or data collection for digital purposes or drone didi can help farmers with a higher price. It only helps in reality the industry to tighten control over the farming systems.

What farmers actually need is the assurance of a guaranteed price. If only soybean farmers were protected under a legal framework that ensures the MSP being guaranteed, there would have been no need for Kamlesh Patidar to plough back his standing crop.

(The author is a noted food policy analyst and an expert on issues related to the agriculture sector. He writes on food, agriculture and hunger)