Hi Friends,

Even as I launch this today ( my 80th Birthday ), I realize that there is yet so much to say and do. There is just no time to look back, no time to wonder,"Will anyone read these pages?"

With regards,
Hemen Parekh
27 June 2013

Now as I approach my 90th birthday ( 27 June 2023 ) , I invite you to visit my Digital Avatar ( www.hemenparekh.ai ) – and continue chatting with me , even when I am no more here physically

Wednesday, 2 April 2025

Slowing workforce migration

 

Article link: Slowing workforce migration is one of our biggest worries


Extract from the article:

In a recent statement, L&T Chairman SN Subrahmanyan highlighted the concerns regarding the slowdown in workforce migration, identifying it as a significant issue impacting the industry.

To address this challenge, L&T is actively working on establishing skill training institutes and utilizing technology advancements such as Artificial Intelligence.

Teams within the organization have already developed close to 100 algorithms as part of their efforts to combat the impact of reduced labor mobility on their operations.


My Take:

A. Marketing Revolution - Paul R. Gamble & Alan

"Reflecting on the transition from traditional marketing tactics to a more tech-savvy approach, I find my past insights more relevant than ever.

Back in 2021, I emphasized the importance of leveraging technology to streamline recruitment processes, a concept now echoed in L&T's initiatives to address labor migration woes through technology-driven solutions."


Call to Action:

To L&T Chairman SN Subrahmanyan: Embrace innovation and collaboration to tackle the workforce migration challenge head-on.

Engage with experts in the field to explore holistic solutions that combine skill development, technology adoption, and industry partnerships for sustainable change.


With regards, 

Hemen Parekh

www.My-Teacher.in

Tuesday, 1 April 2025

MSP : a “ Give and Take “ Compromise

 

 

Dear Shri Shivrajsinghji :

{ minister.rd@gov.in  /  contact@shivrajsinghchouhan.net }

 

For past few years , various Farmer Unions have been demanding legally binding guarantees of MSPs for various farm produce  - even though, the Government has been purchasing these crops at MSPs , through tradition

Over the past 3 / 4 years , agitations by farmers have resulted in :

Ø  Blockages of highways leading to total stoppage of traffic

Ø  Loss of life and limbs

Ø  Huge production and revenue losses, for farmers / Govts / Public

I understand, this matter is scheduled for a hearing in Supreme Court today – and a bilateral meeting between the Farmer Unions and the Govt., on 8th April

It is high time , both the parties , in a spirit of “ Give and Take “ , reach a compromise formula soon and move on to a peace-inspired progress towards “ doubling of farm income “ in next 3 years

GIVE ( for the Govt ) :

Ø  Legally binding MSPs for pre-determined crops , using a transparent formula . The structure ( components ) and the logic ( determinants ) of this formula will be pre-agreed by the parties. Thereafter, the formula will use various INPUTS and “ announce “ the MSPs for various crops for each season ( full calculations will be made public , and automatically ) . Once published , this will be binding on the Govt and the farmers. Both the parties to set up a joint “ Commission “ , which will , periodically revise the formula

TAKE ( for the Govt ) :

Ø  The working of the formula will ensure that the TOTAL PAYOUT by the Govt. in any given FINANCIAL YEAR , for purchase of various crops, at the ANNOUNCED MSPs ( for each crop , for each season ) , SHALL NOT EXCEED , a pre-determined % age of Government’s estimated ANNUAL REVENUE BUDGET  for that year.

Ø  In this way, Government will know in advance , the provision to be made for each year , in its revenue budget. This will ensure that the actual govt expenses on this account do NOT exceed the budget figures.

Ø  This fine-tuning will be achieved by the FORMULA , by automatically tweaking the MSP ( Minimum Support Price ) and the MPQ ( Maximum Purchase Quantity ) of each crop so that the SUM TOTAL does not exceed the budget figures.

Ø  This will mean , that neither an MSP , nor the QUANTITY ( that farmers offer for purchase by the Govt., ) of any given crop, are FROZEN .

      Both become VARIABLES In the formula

Now , using this “ Understanding “ as the foundation for a COMPROMISE ( a Win-Win situation for both the parties ) , I submit for your consideration, the following calculations and request you to offer the same ( of course, with modifications suggested by farmers / farm experts / statisticians / Digital Crop Survey / Consumers / Processors etc ) to the Farmers Unions, in your forthcoming meet on 8th April

With regards,

Hemen Parekh

www.HemenParekh.ai  /  www.My-Teacher.in  /  www.HemenParekh.in / 02 April 2025

 

 Updated Automatic MSP Formula with Minimum Procurement Guarantee

Core Idea :

The formula now ensures a minimum procurement guarantee (e.g., 25% of total production per crop) while still capping the total MSP payout at 10% of the government’s revenue budget.

It uses Digital Crop Survey (DCS) data and a software system to dynamically adjust procurement quantities, balancing farmer security and fiscal limits. Surplus management is addressed separately afterward.



Key Factors in the Formula :


1.     Total Revenue Budget (TRB)

o    Definition: The government’s total revenue expenditure for the fiscal year.

o    Data: ₹35,02,136 crore for 2023-24.

o    Role: Sets the fiscal ceiling. At 10%, the Maximum MSP Payout Cap (MPC) = ₹3,50,213.6 crore.

o    Why: Ensures the government’s financial commitment is predictable and sustainable.


2.     Maximum MSP Payout Cap (MPC)

o    Definition: The total budget for MSP procurement, capped at 10% of TRB.

o    Calculation: MPC = TRB × 0.10 = ₹3,50,213.6 crore.

o    Role: Limits total expenditure, addressing the government’s concern about runaway costs.


3.     Digital Crop Survey (DCS) Data

o    Definition: Real-time production estimates for each MSP-covered crop.

o    Data: 332.3 million tonnes of food-grains in 2023-24 (specific crop breakdowns assumed for calculation).

o    Role: Provides accurate production data (TP_c) to calculate procurement quantities.

o    Why: Enables precision and transparency, reducing disputes.


4.     Baseline MSP per Crop (MSP_b)

o    Definition: The announced MSP for each crop.

o    Data: Paddy = ₹23,000/tonne, Wheat = ₹24,250/tonne, etc.

o    Role: Guarantees farmers a minimum price, legally enforceable as demanded.

o    Why: Ensures income stability, a core farmer demand.


5.     Total Production per Crop (TP_c)

o    Definition: Estimated production per crop from DCS.

o    Example: Rice = 1200 lakh tonnes, Wheat = 1100 lakh tonnes (hypothetical split).

o    Role: Basis for calculating procurement quantities and potential payouts.

o    Why: Reflects actual supply, critical for allocation.


6.     Minimum Procurement Guarantee (MPG)

o    Definition: A fixed percentage of TP_c that the government must procure at MSP, regardless of budget constraints.

o    Proposal: Set MPG at 25% of TP_c for each crop (adjustable based on policy).

o    Calculation: MPG_c = TP_c × 0.25 (e.g., Rice = 1200 × 0.25 = 300 lakh tonnes).

o    Role: Ensures farmers a baseline income, addressing their fear of partial procurement rejection.

o    Why: Responds to request for a guarantee, boosting farmer trust (e.g., Punjab/Haryana farmers who rely heavily on MSP).


7.     Minimum Payout Commitment (MPC_min)

o    Definition: The cost of procuring the MPG for all crops.

o    Calculation: MPC_min = Σ (MPG_c × MSP_b) across all crops.

o    Example:

§  Rice: 300 × 23,000 = ₹69,000 crore.

§  Wheat: 275 × 24,250 = ₹66,687.5 crore.

§  Total MPC_min = ₹1,35,687.5 crore (for simplicity, only two crops here).

o    Role: Locks in a minimum expenditure, ensuring MPG is met before further adjustments.

o    Why: Guarantees fiscal priority for farmers’ baseline needs.


8.     Remaining Payout Capacity (RPC)

o    Definition: Budget left after fulfilling MPG, for additional procurement.

o    Calculation: RPC = MPC - MPC_min = ₹3,50,213.6 - ₹1,35,687.5 = ₹2,14,526.1 crore.

o    Role: Allows flexibility to procure more if funds permit.

o    Why: Balances guaranteed support with fiscal limits.


9.     Procurement Proportion Factor (PPF)

o    Definition: A multiplier (0 to 1) to adjust additional procurement beyond MPG, keeping total payout within MPC.

o    Calculation:

§  Total Potential Payout beyond MPG , (TPP_x) = Σ [(TP_c - MPG_c) × MSP_b].

§  If TPP_x > RPC, PPF = RPC / TPP_x; else PPF = 1.

o    Role: Scales additional procurement equitably.

o    Why: Ensures fairness across crops while respecting the cap.


10.  Adjusted Procurement Quantity (APQ_c)

o    Definition: Total quantity procured per crop (MPG + additional).

o    Calculation: APQ_c = MPG_c + [(TP_c - MPG_c) × PPF].

o    Role: Finalizes procurement, meeting MPG and maximizing within budget.

o    Why: Combines guarantee with flexibility.


11.  Transparency and Dissemination

o    Mechanism: Software publishes MSP_b,  TP_c,  MPG_c,  PPF,  APQ_c,  and total payout on portals, shared with farmer unions and departments.

o    Role: Ensures trust and accountability.

o    Why: Aligns with your blog’s call for transparency.



Example Calculation (Simplified)


  • TRB : ₹35,02,136 crore.

  • MPC : ₹3,50,213.6 crore.

  • Crops: Rice (1200 lakh tonnes, ₹23,000/tonne), Wheat (1100 lakh tonnes, ₹24,250/tonne).

  • MPG : 25%.

    • Rice: 1200 × 0.25 = 300 lakh tonnes; ₹69,000 crore.

    • Wheat: 1100 × 0.25 = 275 lakh tonnes; ₹66,687.5 crore.

    • MPC_min = ₹1,35,687.5 crore.

  • RPC

  • ₹3,50,213.6 - ₹1,35,687.5 = ₹2,14,526.1 crore.

  • TPP_x :

    • Rice: (1200 - 300) × 23,000 = ₹2,07,000 crore.

    • Wheat: (1100 - 275) × 24,250 = ₹1,99,562.5 crore.

    • Total = ₹4,06,562.5 crore.


  • PPF

  • RPC / TPP_x = 2,14,526.1 / 4,06,562.5 ≈ 0.528.

  • APQ_c :

    • Rice: 300 + (900 × 0.528) ≈ 775 lakh tonnes; ₹1,78,250 crore.

    • Wheat: 275 + (825 × 0.528) ≈ 710 lakh tonnes; ₹1,71,925 crore.

    • Total = ₹3,50,175 crore (within MPC).

Surplus Management Suggestions

For crops not procured (e.g., 425 lakh tonnes of rice and 390 lakh tonnes of wheat in the example), surplus management is critical to prevent price crashes. Here are some suggestions :


1.     FPO-Led Market Linkages


o    Suggestion:

o    Leverage Farmer Producer Organizations (FPOs) to connect surplus to processors and exporters, as highlighted in the webinar initiative (Hindu BusinessLine, March 27, 2025). For example, Mother Dairy’s pilot to procure 15,000 tonnes of mustard from Rajasthan FPOs shows a scalable model.


o    How: Government can fund FPOs to aggregate surplus, process it (e.g., mustard oil), and sell under brands, reducing middlemen (your blog’s critique of APMC inefficiencies).


o    Why: Raises farmers’ income by bridging the production-marketing gap, as emphasized in the webinar.


o     

2.     Private Sector Partnerships

o    Suggestion:

o     Incentivize companies (e.g., Mother Dairy, ITC) to buy surplus at market rates or slightly below MSP, with tax breaks or subsidies.


o    How: Create a “Surplus Absorption Fund” (e.g., ₹500 crore, inspired by oilseed buffer corpus ideas) to subsidize private purchases, ensuring farmers don’t distress-sell.


o    Why: My earlier blog stresses private players’ role post-farm laws repeal; this aligns with that vision.

o     

3.     Export Promotion

o    Suggestion: Subsidize export of surplus crops (e.g., rice, pulses) via FPOs or cooperatives, targeting demand in Asia/Africa.


o    How: Use DCS data to identify exportable surplus, offer freight subsidies, and streamline certification.


o    Why: Reduces domestic oversupply, stabilizing prices, and echoes your blog’s call for market-led solutions.

o     

4.     Value Addition Clusters

o    Suggestion: Establish 600+ value chain clusters (per National Oilseeds Mission) to process surplus into products like oil, flour, or feed.


o    How: Fund FPOs/cooperatives to set up units, as Mother Dairy plans with mustard, scalable to other crops.


o    Why: Turns surplus into profit, aligning with the webinar’s processor linkage goal.

o     

5.     Public Distribution System (PDS) Expansion


o    Suggestion: Distribute surplus grains/oilseeds via PDS, as my earlier blog suggests reviving edible oil in PDS (discontinued in 2002).


o    How: Procure beyond APQ_c if storage allows, distributing at subsidized rates to vulnerable families.


o    Why: Manages surplus while addressing food security, a dual win.


Feasibility and Alignment


  • Minimum Procurement Guarantee:

The 25% MPG ensures farmers (especially in Punjab/Haryana) a safety net, addressing protest concerns. It’s fiscally viable (₹1,35,687.5 crore is ~39% of MPC in the example).


  • Surplus Management:

FPO-led initiatives and private partnerships reflect the webinar’s focus on sustainability and my earlier  blog’s push for market reforms over government monopoly.


  • Software:

Automates all calculations, publishing results transparently, fulfilling the desirability of an undisputable system.

 

My Earlier 42 Blogs / E Mails on this subject :

Ø  My Agriculture Related Blogs ( up to 02 Jan 2025 )