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On agriculture, look for low-hanging fruit, move carefully

February 07, 2026 4 min read Economics GS Paper III (Agriculture Indian Economy)
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What Happened

  • The Union Budget 2026-27 prioritized high-value crops such as coconut, cocoa, and cashew, allocating Rs 350 crore to boost farmer incomes through crop diversification.
  • Agricultural experts and farmer unions have raised concerns that the budget's structural reform approach lacks immediate relief for farmers struggling with low market prices, particularly for nutri-cereals, pulses, and oilseeds.
  • The Bhartiya Kisan Union (BKU) reiterated its demand for MSP coverage for all agricultural crops, not just the currently covered commodities.
  • Economists have argued that without robust procurement mechanisms for alternative crops, calls for diversification away from water-intensive paddy and wheat remain largely rhetorical.
  • The editorial emphasis is on pursuing incremental, achievable reforms ("low-hanging fruit") in agriculture rather than sweeping structural changes that risk political backlash.

Static Topic Bridges

Minimum Support Price (MSP) Mechanism

The MSP system, recommended by the Commission for Agricultural Costs and Prices (CACP), currently covers 23 crops plus sugarcane (under Fair and Remunerative Price). Since the Union Budget 2018-19, MSP has been set at a minimum of 1.5 times the all-India weighted average cost of production (A2+FL formula).

  • 23 crops covered: 7 cereals (paddy, wheat, maize, bajra, jowar, ragi, barley), 5 pulses (chana, arhar, urad, moong, masur), 7 oilseeds (rapeseed-mustard, groundnut, soyabean, sunflower, sesamum, safflower, nigerseed), and 4 commercial crops (cotton, sugarcane, copra, raw jute).
  • Procurement agencies: FCI and state agencies (cereals), NAFED and NCCF under PM-AASHA (pulses and oilseeds), CCI (cotton), JCI (jute).
  • The Swaminathan Committee (2006) had recommended MSP at 1.5 times the comprehensive cost (C2), which includes imputed rent and interest on owned capital — a higher benchmark than the currently used A2+FL formula.
  • Effective procurement remains concentrated in paddy and wheat, with limited market intervention for other MSP crops.

Connection to this news: The gap between MSP announcement for 23 crops and actual procurement for most of them is a central critique raised against the budget's diversification push — farmers hesitate to shift crops without assured market access.

Crop Diversification and Agricultural Sustainability

India faces a structural imbalance in cropping patterns, with excessive dependence on rice-wheat systems in states like Punjab and Haryana, leading to groundwater depletion and soil degradation. Various government schemes have aimed to encourage diversification toward pulses, oilseeds, and horticulture.

  • The PM Fasal Bima Yojana (PMFBY, 2016) provides crop insurance but has seen states opting out due to premium disputes.
  • The National Mission on Oilseeds and Oil Palm (NMOOP) was merged into the National Mission on Edible Oils - Oil Palm (NMEO-OP) in 2021, targeting 11.2 lakh hectares of oil palm by 2025-26.
  • India imports over 55% of its edible oil requirements, spending approximately $15-20 billion annually.
  • Punjab's Crop Diversification Programme incentivizes farmers to shift from paddy to maize, cotton, and pulses with per-acre compensation.

Connection to this news: The budget's allocation for high-value crops like coconut, cocoa, and cashew adds another diversification avenue, but without addressing the underlying procurement and market access challenge, adoption remains limited.

Agricultural Marketing Reforms

Post the repeal of the three farm laws in 2021, agricultural marketing reforms have proceeded incrementally through state-level APMC reforms and digital platforms. The e-NAM (National Agriculture Market) platform integrates mandis electronically to create a unified national market.

  • e-NAM has integrated over 1,361 mandis across 23 states as of 2025, facilitating transparent price discovery.
  • The Model APMC Act and Model Contract Farming Act remain advisory, with states adopting reforms at varying paces.
  • Farmer Producer Organizations (FPOs) have been promoted under a Central Sector Scheme targeting 10,000 FPOs by 2027-28.
  • The PM-KISAN scheme provides Rs 6,000 per year to over 11 crore farmer families as direct income support.

Connection to this news: The editorial's call for "low-hanging fruit" reforms aligns with incremental approaches like strengthening e-NAM, expanding FPO networks, and improving cold chain infrastructure — reforms less politically contentious than MSP legislation or land-market deregulation.

Key Facts & Data

  • MSP covers 23 crops plus sugarcane (FRP); set at minimum 1.5 times A2+FL cost since 2018-19.
  • Budget 2026-27 allocated Rs 350 crore for high-value crop promotion (coconut, cocoa, cashew).
  • India imports over 55% of its edible oil needs, spending $15-20 billion annually.
  • e-NAM has integrated over 1,361 mandis across 23 states.
  • PM-KISAN covers over 11 crore farmer families at Rs 6,000 per year.
  • Procurement agencies: FCI (cereals), NAFED/NCCF (pulses/oilseeds under PM-AASHA), CCI (cotton).
  • Three farm laws were repealed in November 2021.