Kharif 2018 season almost complete; steep increases in MSPs don’t expand crop area

By: | Published: September 3, 2018 2:54 AM

As sowing is complete, bajra and ragi areas down, despite MSP hikes being the steepest.

Kharif 2018 season almost complete; steep increases in MSPs don’t expand crop area

How far does a hike in minimum support price (MSP) determine the farmers’ choice of crop? As the kharif 2018 sowing is almost complete, acreages of bajra and ragi have dropped from last year’s levels even though their MSP hikes were the steepest among all crops for the season. Cotton also saw a sharp MSP increase but its area also is still to catch up with last year’s (see chart).

Rather than the quantum of MSP increase, several factors like the expected rate of return on a crop relative to viable alternatives, weather/rainfall and the prevailing market prices influence farmers’ decisions.

Uncertainty over the chances of actual purchases at MSPs may have also had an impact. Analysts, however, note that an earlier announcement of MSPs could have prompted farmers to expand the sowing areas of the two coarse cereals, bajra and ragi.

The Cabinet on July 4 announced 4-52% hikes in MSPs of 14 kharif crops, in line with a new policy of keeping these benchmark rates at a minimum of 150% of the cost of production (A2+FL). Sowing of kharif crops begins with the onset of monsoon, normally on June 1.

Farmers in Rajasthan, which is the largest producer of bajra, have shifted to pulses like moong as the state received good rainfall in June-July. The state’s sowing area under bajra was 6.26% lower than last year’s at 39.71 lakh hectares as on August 31, while moong acreage was up 22%.

Similarly, the area under ragi in Kartnataka, the top producer of the nutri-cereal, was 29% lower than the year-ago period at 3.98 lakh hectares as of August 31.

The Centre increased the MSP of ragi by 52.47% to Rs 2,897/quintal for 2018-19, the sharpest increase among 14 kharif crops. Similarly, the bajra MSP has been fixed at Rs 1,950/quintal, up 36.84%; against the A2+FL cost, the new MSP is up 97%, the widest such difference among the 14 crops.

“By the time the MSPs were announceed, farmers had already taken decisions on the crops. Since the availability of seeds is a problem in case of coarse cereals, farmers start collecting seeds well in advance. Next year, sowing (of coarse cereals) may catch up, provided procurement is made at MSPs,” said Arabinda Padhee, India head of International Crops Research Institute for the Semi-Arid Tropics (Icrisat), which does research for development of coarse cereals in Asia and Africa.

Farmers in Madhya Pradesh have shifted to soyabean from urad during this kharif season and as a result, a 12.8% pan-India decline has been reported in urad acreage until last week while soyabean jumped 6.24%. Madhya Pradesh is the largest producer among Indian states of both urad and soyabean.

By- Prabhudatta Mishra

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