Govt hikes rabi MSPs in advance amid farmer stir

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September 22, 2020 6:50 AM

After a meeting of cabinet committee on economic affairs (CCEA), agriculture minister Narendra Singh Tomar told Parliament the Food Corporation of India (FCI) and other agencies would continue to buy the crops at their MSPs.

The new MSPs of rabi crops are usually announced in October or November.The new MSPs of rabi crops are usually announced in October or November.

The Cabinet Committee on Economic Affairs (CCEA) on Monday approved 2-6% increases in the minimum support prices (MSP) for the 2020-21 rabi season. Even as the winter sowing is yet commence, the expectations of a bumper crop has brightened, since abundant rains in the monsoon season have led to improved soil moisture conditions.
After a meeting of cabinet committee on economic affairs (CCEA), agriculture minister Narendra Singh Tomar told Parliament the Food Corporation of India (FCI) and other agencies would continue to buy the crops at their MSPs.

The announcement of MSP was a month earlier than last year, probably to re-assure farmers about the government’s commitment on continuing the MSP amid the farmers’ protests against the farm bills approved by Parliament. The new MSPs of rabi crops are usually announced in October or November.

Even as the MSPs for rabi season have been set on the basis of the government’s promise to provide minimum 50% profit to farmers over their cost of production (A2+FL), the current increase is lower compared to last year’s increase in the range of 5-7%.

In the case of wheat, the key winter crop, the new MSP will be Rs 1,975 per quintal, up 2.6% over last year. This is also significant since the government is betting on higher production of wheat next year after it revised its 2020-21 (July-June) foodgrains output target to 301 million tonne, up from 298.3 million tonne in April. The first advance estimate of major kharif crops for 2020-21 may be announced next week. The country had record 296.65 million tonne in 2019-20.

Robust production doesn’t necessarily boost farmers’ earnings. In the case of many crops, including oilseeds and pulses, the procurement levels are crucial and even the price support scheme sans procurement doesn’t seem to be working on the ground. Although the government purchases have increased in last five years compared to previous five years, the benefits of MSPs are limited mostly to paddy, wheat farmers in Punjab, Haryana, Madhya Pradesh and Uttar Pradesh. First time this year the FCI had purchased sizable quantity of paddy in Telangana and Andhra Pradesh.

The new benchmark rate of chana is Rs 5,100 per quintal, up 4.6% over the year-ago season while the MSP of mustard, the key oilseed crop of the winter season, has been raised 5.1% to Rs 4,650 per quintal. To encourage cultivation of pulses, the support price of masur has been increased by 6.3% to Rs 5,100 per quintal, highest among all rabi crops. Masur production has declined to 1.18 million tonne in 2019-20 from 1.23 million tonne last year after hovering below 1 million tonne for a decade until 2010. There has been a good increase in area under masur in Madhya Pradesh and higher yield in Bihar, the main grower of the crop.

The MSP of another winter-grown oilseed safflower has been hiked by 2.1% to Rs 5,327 per quintal. The production of safflower has been declining and reached at 30,000 tonne in 2019-20 from a level of 2.4 lakh tonne in 2006-07.
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.

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