The Farmers’ Right to Guaranteed Remunerative Minimum Support Prices for Agricultural Commodities Bill, 2018


This is one of the two private member’s bills that Raju Shetti, Member of Parliament from Hatkanangle constituency in Kolhapur district, Maharashtra, introduced in the Lok Sabha on August 3, 2018. (The other is The Farmers’ Freedom from Indebtedness Bill, 2018.) Shetti, a farm leader and the founder of the Swabhiman Paksha, is also a member of the All India Kisan Sangharsh Coordination Committee, an umbrella organisation of over 160 groups and unions of farmers and agricultural workers.
This bill proposes that every farmer has the legal right to a guaranteed remunerative minimum support price (MSP) for the sale of his/her agricultural commodity. The bill also proposes a redress and compensation mechanism for farmers and traders, the regulation of prices offered by traders, and rules for public authorities for accountable functioning.

The bill states that the prices farmers get for their commodities do not cover their input costs or help them meet their basic needs. Inadequate returns on investment have led to the suicides of tens of thousands of farmers each year.

The AIKSCC and citizens’ groups are demanding that both these bills be discussed and adopted in a special 21-day session of Parliament dedicated to the agrarian crisis.


  1. Who is a farmer according to this bill?

    Section 2(g) of the bill defines a farmer as a person who grows crops or other primary agricultural commodities; he or she may or may not own land. This definition also includes all agricultural ‘operational holders’, cultivators, agricultural labourers, sharecroppers, tenants, poultry and livestock rearers, fish workers, beekeepers, pastoralists, non-corporate planters and planting labourers, forest-produce gatherers, women farmers, and farmers’ groups, producer cooperatives or self-help groups cultivating collectively-owned or leased land.

  2. Which agricultural commodities does the bill cover?

    According to Section 2(a) of the bill, an agricultural commodity refers to all cereals, millets, pulses, oilseeds, all fibre crops, horticulture crops (fruits and vegetables), spice crops, tuber crops, medicinal plants, all varieties of milk, all minor forest produce, floriculture, grass, fodder grass and tree produce, nursery produce, all plantation produce, all animal products (meat, mutton, eggs and poultry), all fishery produce (fish, mussels, marine fish and freshwater aquatic produce), honey, silkworm cocoons, and all such primary produce/agricultural commodities and their ‘cognate expressions’.

  3. What is the guaranteed remunerative minimum support price for any agricultural commodity?

    The bill says that the guaranteed MSP should include at least a 50 per cent profit margin over the comprehensive cost of production. This was also one of the recommendations of the National Commission on Farmers, which submitted its reports on the agrarian crisis to the central government between 2004 and 2006.

  4. How should the comprehensive cost of production be estimated?

    The bill says it should cover:

    Paid-out costs, which include the costs of human, animal and machine labour; annual maintenance costs of animals and machinery; expenses on inputs such as seeds, fertilisers, manure, pesticides, insecticides, weedicides and irrigation; depreciation on implements and farm buildings; land revenue and other taxes; rent of leased land; interest on credit obtained; insurance premiums; and processing, transport and marketing costs.

    Imputed costs that include the cost of family labour (at wage rates for that area); rent of owned land; interest on fixed and working capital; a risk margin of 10 per cent over the cost of cultivation per hectare; and managerial costs.

    Projected costs, calculated using a Composite Variable Input Index that is based on the rate of inflation of different inputs. This should be applied to fixed costs and to any other costs resulting from the increase in the use of a particular input.

  5. What are the Central Commission and the State Commission?

    The bill says that the central government must set up the Central Farmers’ Agricultural Costs and Remunerative Price Guarantee Commission to recommend guaranteed remunerative MSPs that include at least a 50 per cent profit margin over the comprehensive cost of production. The Central Commission must also monitor the prices being realised by agricultural commodities, and recommend that the government regulate the costs of agricultural inputs.

    The State Farmers’ Agricultural Costs and Remunerative Price Guarantee Commission must be set up by the state government. It should recommend the MSPs of agricultural commodities of the state to the Central Commission. It should also suggest higher MSPs to the state government and a bonus over and above the MSPs. It must also maintain a fund for paying compensation to farmers who are denied the guaranteed remunerative MSP or who are forced to wait for payments from buyers (including government procurement agencies) for the sale of their agricultural commodities.

  6. What does the bill say about redress for grievances and compensation for farmers?

    The State Commission should constitute a three-member committee at the taluka level to address any complaints by farmers. A farmer who is not paid the guaranteed remunerative MSP by a trader is entitled to  compensation equal to the difference between the MSP and the price obtained for his agricultural commodity from the trader. For delayed payments from buyers (including government procurement agencies), a farmer can get a compensation of 15 per cent of the total value of his/her agricultural commodity for every month of the delay.

  7. What are the offences and penalties mentioned in this bill?
    The state government must ensure that the offer price or auction of every agricultural commodity begins at the guaranteed remunerative MSP in all agricultural markets. 
    According to this bill, any trader (including one in a contract farming agreement) who purchases a commodity below the guaranteed MSP or refuses to buy it at the MSP, commits a cognisable offence. The trader must pay a penalty for this offence and can be imprisoned for a period of three months to a year.
    Any agreements (oral or otherwise) between purchasers/traders or commission agents that limit, control or suppress the sale prices of agricultural commodities (which, in turn, adversely affect the MSP) are also illegal and can led to penalties or imprisonment.
    Finally, the State Commission can find any public servant or authority guilty of not initiating action against traders for purchasing agricultural commodities below the MSP, intervening in the market, or not providing compensation to farmers. In such cases, the person can be fined one month’s salary and imprisoned for six months.

    Focus and Factoids by Subuhi Jiwani.


Raju Shetti, Member of Parliament, Lok Sabha


Government of India, New Delhi 


06 Apr, 2018