The Cabinet Committee on Economic Affairs on Wednesday increased the minimum support prices (MSP) for rabi crops in the range of 2-21% for 2018-19 from last year’s level. This comes after five out of six crops were already more than 50% of their A2+FL costs in 2017-18. Announcing the new Rabi MSPs of the 2018-19 crop year (July-June), agriculture minister Radha Mohan Singh said wheat the price has been increased by Rs 105 to Rs 1,840 per quintal.
It is 6% more than last year’s Rs 1,735/quintal and still 112.5% higher than its estimated cost of production (A2+FL) of Rs 866/quintal. The benchmark rate of chana, which was already 78% over the A2+FL cost in the last rabi season, has been raised by 5% to Rs 4,620 per quintal. Even for the current season, the price is 75% more than its cost of production of Rs 2,637.
Similarly, the MSP of mustard, the key oilseed crop of the winter season, has been raised 5% to Rs 4,200/quintal. After the revision, the new rate is 90% more than its estimated cost of Rs 2,212. FE had estimated that if market prices of crops (except sugarcane) are lower than the MSP by 20%, this could cost the exchequer as much as Rs 1,75,000 crore in a full year; this assumes that all the crops will be brought to the market since farmers will find it more profitable to sell the crop to the government and then buy back what they need for consumption when the prices fall.
Singh said the hike in MSPs will help farmers to earn Rs 62,635 crore additional income. But he could not clarify the income to grow from which level. Sowing of rabi crops begins from October and harvesting season starts from April. Some of the early-sown crops start arriving in the mandis from March. The monsoon rainfall was 22% deficient in September bringing moisture level down and this early announcement may help farmers to plan their crops suitably, officials said.
The kharif MSP was announced on July 4, more than a month after the sowing season began and experts have attributed the delay to fall in acreages of urad, cotton and some coarse cereals. Among other crops, the MSP of masur has been fixed at Rs 4,475 a quintal, up 5.29% from last year’s Rs 4,250/quintal. In case of safflower, the new MSP is Rs 4,945/quintal, an increase of 20.61%. It was the only crop in which the MSP was 31% more than its cost last year. To fulfill the promise of fixing the MSPs of all crops at 150% over their costs (A2+FL), the safflower price has been given the maximum increase among all crops this year. Barley MSP has been increased by 2.13% to Rs 1,440/quintal.