The Supreme Court on Tuesday issued a notice to the Central government on a public interest litigation seeking direction to pay farmers the weighted average cost of production for their crops, along with a reasonable profit margin.
A bench of Justices B.R. Gavai and K.V. Viswanathan sought the Centre’s response within four weeks.
What the plea demands
The petition, filed by the ‘Kisan Ekta Manch’ through advocate Prashant Bhushan, argues that the current Minimum Support Price (MSP) mechanism is inadequate as it does not guarantee farmers a fair price covering their actual input costs.
The plea seeks a direction to the government to determine and pay farmers the “weighted average cost of production” for all major crops, plus a reasonable profit margin of at least 50% over that cost.
The petitioner contends that this formula is already recommended by the Swaminathan Commission report, which the government has not fully implemented despite repeated assurances.
Current MSP system falls short
According to the petition, the Commission for Agricultural Costs and Prices (CACP) currently computes MSP based on a formula that includes A2+FL (actual paid-out costs plus imputed value of family labour). However, this does not fully capture the comprehensive production costs borne by farmers, including imputed rent on owned land and interest on owned capital.
“The weighted average cost of production, which includes all input costs across different regions and farm sizes, would provide a more accurate and fair basis for price determination,” the plea states.
The petition also highlights that farmers across Punjab, Haryana, Uttar Pradesh, Maharashtra, Karnataka and other states have been protesting for years demanding a legal guarantee on MSP and cost-based pricing.
Government’s previous stance
The Central government has previously opposed any legal mandate on MSP, arguing that pricing is a complex economic decision involving multiple factors including market demand, inflation control, and fiscal constraints.
In Parliament, the government has maintained that MSP already provides a safety net and that procurement operations cover major crops like wheat and paddy extensively.
Why weighted average cost matters
Agricultural economists argue that weighted average cost of production takes into account varying input costs across different regions, farm sizes, and cropping patterns. A single flat MSP often disadvantages farmers in less productive regions or those with higher input costs.
The Swaminathan Commission had famously recommended that MSP should be at least 50% above the comprehensive cost of production (C2 cost, which includes imputed rent and interest).
What happens next
The Supreme Court will hear the matter again after the government files its response. If the court issues a direction in favour of the farmers, it could fundamentally alter how crop prices are determined in India – potentially increasing the government’s subsidy burden significantly but also providing assured returns to millions of farmers.
The case is seen as a major test of judicial intervention in agricultural pricing policy.
