The Supreme Court has issued notice to the Centre and two others on a joint PIL by three farmers seeking a direction to the Union government to accord due weightage to the exact cost of cultivation proposed by the respective states while fixing the minimum support price.

The petitioners also urged the court to direct the authorities to ensure complete procurement of notified crops at the MSP.

According to the petitioners, such a directive is necessary because Indian farmers are facing a severe financial crisis, unable to sell their produce even at the actual cost of production. This has led to large-scale farmer suicides, with over 17,000 tillers taking their lives in Maharashtra alone in the last five years, advocate Prashant Bhushan appearing for the petitioners told a bench headed by Chief Justice Surya Kant.

It was submitted that at present the government and its instrumentalities have state-wise calculations of the cost of production of different agricultural products. They also estimate the total quantity of each product produced by every state.

This cost is calculated by factoring in the following elements of cost: actual input cost (A2) plus notional cost of family labour used to produce the crop (FL) plus rental value of owned land and rent paid for leased land, plus interest on working capital. This cost is aggregated to compute the total cost of cultivation for the farmer, which is called C2.

The petitioners submitted that in 2006, the M.S. Swaminathan Commission Report had recommended that farmers should be paid their cost plus 50 per cent profit to make farming viable in the country. This recommendation has never been questioned by the government. “However, the MSP fixed by the government year by year and crop by
crop is considerably less than the weighted average cost of production, i.e., C2 for the country. It is less than the average cost of production for almost all states,” the farmers submitted.

“Moreover, apart from wheat and rice, where the government does procure the crops of most farmers at the MSP, the government has hardly been procuring other crops even at the low MSP fixed by the government. This has led to acute distress amongst farmers in the country, leading to violation of their Article 21 rights (right to life and liberty) guaranteed under the Constitution,” they added.

It was submitted that for some crops, especially wheat and rice, the government is virtually the monopoly purchaser since it distributes the produce under the Food Security Act at highly subsidised prices among the people. “Although the objective is laudable, it has led to the destruction of an agricultural market for these crops, as a result of which, if these crops are not procured by the government at least at the cost of production, the farmers will be unable to sell them in the distorted market,” the petition said.

Further, the provision of give free wheat and rice under the Act to roughly
two-thirds of the population has also resulted in artificially depressing the demand for other competing crops, particularly millets.

Besides the Centre, the bench sought responses from the Director-General of Foreign Trade and the Commission for Agricultural Costs and Prices.