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.
The Cabinet Committee on Economic Affairs (CCEA) on Wednesday approved modest increases of 5-7% in the minimum support prices (MSP) for rabi crops for the 2019-20 season. Even as the winter sowing has just commenced in most parts of the country, the expectations of a bumper crop has brightened, since abundant rains in August and September have led to improved soil moisture conditions.
Information and broadcasting minister Prakash Javadekar said the new 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). “This will also help achieve the government’s target of doubling farmers’ income (by 2022),” he said.
In the case of wheat, the key winter crop, the new MSP will be Rs 1,925 per quintal, up 5% over last year. In fact, despite the modest hike this year, the wheat MSP allows a 109% return over cost of production.
In its first advance estimate of major kharif crops for 2019-20, the government had said production of foodgrain to be close to last year’s record output and chances are that this will be revised upwards.
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.
The new benchmark rate of chana is Rs 4,875 per quintal, up 5.5% over the year-ago season, and denoted return over cost to farmers of 74%. Similarly, the MSP of mustard, the key oilseed crop of the winter season, has been raised 5.4% to Rs 4,425 per quintal, yielding 90% return.
To encourage cultivation of pulses, the support price of masur has been increased by 7.3% to Rs 4,800 per quintal. Masur production has increased to 1.56 million tonne in 2018-19 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. Similarly, the MSP for gram, the major pulse crop of the winter, has been hiked 5.5% to Rs 4,875 per quintal.
The MSP of another winter-grown oilseed safflower has been hiked by Rs 270 to Rs 5,215 per quintal and it is just 50% over its A2+FL cost. The production of safflower has been declining and reached at 24,000 tonne in 2018-19 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. The monsoon rainfall was 10% above normal this year.