MSP package: Farmers find price support elusive

Published: November 8, 2018 12:56 AM

An analysis of price data also showed that the average rates of seven crops including jowar, bajra, maize, urad and moong were 10-41% below MSPs in October.

The procurement mechanism is yet to be up and running in most states.

By Prabhudatta Mishra

Prices of 12 among the 14 kharif crops have ruled below their minimum support prices (MSPs) since arrival of the summer crop began more than a month ago, and in case of five of these crops namely paddy, tur, groundnut, niger and ragi, the prices have been on a continuous decline through the season.

While the 12 crops’ prices in key mandis in October were on an average 8-40% lower than the respective MSPs, the five crops are now being sold 5-9% lower than in the first week of last month. Only cotton and sesamum are costlier to wholesalers than their MSPs (see chart).

Despite a 4-52% rise in MSPs for this kharif and the PM-AASHA, a stronger price support scheme, farmers are still being denied remunerative prices for their produce. The procurement mechanism is yet to be up and running in most states.

The average mandi price of common variety of paddy, for instance, is about Rs 1,536/quintal now against Rs 1,612 in the first week of October in Burdwan, West Bengal, India’s largest rice producer. Groundnut prices have also declined to Rs 4,425/quintal as on October 31 from Rs 4,650 on October 1 in Deesa mandi of Banaskanth, Gujarat, according to agmarknet portal. The average mandi prices of the 5 crops mentioned above were 8-35% below their respective MSPs last month.

An analysis of price data also showed that the average rates of seven crops including jowar, bajra, maize, urad and moong were 10-41% below MSPs in October.

However, the mandi prices of these seven crops are now higher compared with the rates in the first week of October, but still below the MSPs.

Among the crops which averaged below their MSPs during the period under review, tur prices were down 34%, groundnut 8%, ragi 23% and niger 35%.

Rolling out a package of price deficiency support schemes for agricultural crops, the government had announced an extra Budget outlay of over Rs 15,000 crore for procurement of non-National Food Security Act (NFSA) crops during the June 2018-July 2019 crop year. It also enhanced the government guarantee for Nafed to undertake procurement of pulses and oilseeds by Rs 16,550 crore to Rs 45,450 crore for this fiscal.

If the policy of assured price support is to be implemented throughout the country and for all 23 identified crops, then the cost could indeed turn out to be far higher.

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