In late January 1959, a 13-member Ford Foundation-sponsored Agricultural Production Team from the US spent over two months in India, travelling to different states meeting people on the ground and “officers at all levels from Gram Sevak to Chief Minister”. Their mission: To study India’s food production problems.
The team – mainly US Department of Agriculture officials and scientists from Cornell University and land-grant state universities of Iowa, Kansas, Arkansas and Maryland – submitted a report of its findings and proposals to then Union Minister of Food and Agriculture Ajit Prasad Jain in early April.
That report, titled ‘India’s Food Crisis and Steps to Meet It’, contained the germ of a policy idea much in the news now: a guaranteed Minimum Support Price (MSP) for crops. The report listed three “specific assurances” to be given to cultivators:
“(1) A guaranteed minimum price publicized in advance of the planting season. (2) A market that is ready to accept his crops at the floor price at the time he wants to sell. (3) Availability of this market within bullock-cart hauling distance”.
The first assurance laid the basis for the MSP, which was fixed for the first time in the 1964-65 crop season for paddy (at Rs 33.5-39 per quintal, depending on the variety) and in 1966-67 for wheat (at Rs 54/quintal). The second and third related to the Agricultural Produce Market Committee or APMC mandis, where farmers were to bring their harvested produce for sale.
India’s annual foodgrain production, in the five years ended 1958-59, averaged just over 69 million tonnes (mt). The Ford Foundation team projected a 100-110 mt demand by 1965-66 – for a population of 480 million consuming 18 ounces (0.5 kg) of cereals and pulses daily per capita, plus allowing for seed, feed, wastage and a minimum reserve requirement. Meeting that, in order to “prevent hunger and possible civil disturbance”, called for “an all-out emergency food production programme”.
The MSP was thus conceived at a time of an impending food crisis in India. The US was most concerned about it catalysing communist revolutions – the report pointed to the imperatives of “securing democracy” – especially against the background of the Vietnam War that had started in November 1955.
The report saw the guaranteed minimum price as an “important incentive” for farmers to increase production: “The cultivator should be assured of a price which will enable him to invest in fertilizer, seed and new equipment knowing that, with average crop conditions, he can repay any debts with the added income that results from adoption of improved practices”.
The report suggested the establishment of a “permanent agency” responsible for determining the guaranteed price. The latter would protect farmers against “the tendency for prices to be low immediately after harvest, which is the time when he must sell to meet his obligations”. The floor price “should be announced to cultivators before sowing time and remain in effect for one full year”. While the marketing of foodgrains may generally be left to private traders or cooperatives, “the Government should stand ready to buy at the minimum price any quantity offered for sale”.
For years, the Ford Foundation team’s report gathered dust. None of its key recommendations were acted upon till Chidambaram Subramaniam took charge as Food and Agriculture Minister, on June 9, 1964, in Prime Minister Lal Bahadur Shastri’s Cabinet.
On August 1, 1964, Subramaniam appointed a Foodgrains Prices Committee under L K Jha, Secretary to the Prime Minister, for determining the “producers’ price” for paddy and wheat in the 1964-65 crop year. This price was understood as “a minimum price or a support price at which Government should undertake the responsibility for purchasing any quantities that may be offered at approved assembling points”. In other words, the MSP. It was first announced for paddy on October 13, after the committee gave its report on September 24.
The Jha panel also submitted its views, separately on December 24, regarding constitution of an Agricultural Prices Commission (APC) in line with what the Ford Foundation team envisaged. The APC, which came into being on January 1, 1965, was entrusted with the job to provide advice on price policy, “on a continuing basis”, for not just paddy and wheat, but also coarse cereals, pulses, oilseeds, sugarcane, cotton and jute.
The other major institution Subramaniam was instrumental in creating was the Food Corporation of India (FCI), through a law enacted on December 10, 1964. This statutory corporation, set up on January 14, 1965, was mandated to “undertake the purchase, storage, movement, transport, distribution and sale of foodgrains and other foodstuffs”, while ensuring payment of MSP to the farmer.
With the MSP, APC, FCI and APMCs (“approved assembling points’) in place, the stage was set for the Green Revolution. The seeds for it came from another American “foreign hand”, the Rockefeller Foundation. Norman Borlaug, who was with the foundation’s Mexican Agriculture Program, had bred the high-yielding semi-dwarf wheat varieties field-tested by the Indian Agricultural Research Institute (IARI) during the 1963-64 rabi season. The encouraging trial results led M S Swaminathan, then heading IARI’s Division of Botany, to push for import of 18,250 tonnes of the seeds of the Mexican wheat strains.
It was Subramaniam who, yet again, took the call to import. There was no choice really, with foodgrain production collapsing to 72.4 mt in 1965-66 and 74.2 mt in 1966-67 on the back of successive droughts. But the MSPs, APC, FCI, APMCs – and the high-yielding varieties – delivered. By 1970-71, India’s foodgrain output had crossed 108.4 mt.
Subramaniam fittingly was awarded the Bharat Ratna in 1998 and Swaminathan finally in 2024.
In 2020-21, Punjab and Haryana farmers agitated against the Centre’s alleged undermining of APMCs. This time, they are on the streets demanding a “legal guarantee” for MSP.
