A month into the harvesting season, prices of 12 among the 14 kharif crops are ruling below their minimum support prices (MSPs), indicating that procurement by the designated agencies hasn’t yet gathered momentum, despite PM-AASHA, a stronger price support scheme announced by the government recently.
A month into the harvesting season, prices of 12 among the 14 kharif crops are ruling below their minimum support prices (MSPs), indicating that procurement by the designated agencies hasn’t yet gathered momentum, despite PM-AASHA, a stronger price support scheme announced by the government recently. A review of mandi prices by FE showed that prices of 12 monsoon-sown crops including paddy, maize, moong and soyabean were 7-43% below their MSPs between October 1 and 23. Only cotton and sesamum are now costlier to wholesalers than their MSPs (see chart).
For the 14 kharif 2018 crops, the government had earlier announced MSP hikes in the range of 4-52% in sync with the policy to keep MSPs at 1.5 times the cost. “Unless demand factors too are given weightage while fixing the MSPs (rather than only cost), the price support scheme will fail to ensure the benchmark prices,” former CACP chairman Ashok Gulati said at a conference on October 25.
The government won’t be able to swim against the forces of demand-supply for too long, and for so many commodities, he warned. 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. The NITI Aayog had earlier estimated the total cost of nationwide implementation of the Market Assurance Scheme, which involves decentralised procurement and disposal of the stocks by state, at a little over Rs 1.11 lakh crore, assuming that all the 23 crops identified, including wheat and rice, are covered up to 40% of the marketable surplus and that the price loss (difference between farm harvest prices and the minimum support prices) to be eligible for compensation is capped at 25% of the MSPs.
The average mandi price of common variety of paddy was Rs 1,559/quintal, down 11% from its MSP in Burdwan, West Bengal, India’s largest rice-producing state, during the review period, according to agmarknet portal. Similarly, jowar, bajra and urad were down 26%, 24% and 43%, respectively, in major mandis of Rajasthan where these crops arrive in large quantities.
Freshly-harvested moong crop, which started arriving from mid-September in many states, was quoted at an average of 35% below its MSP of Rs 6,975/quintal. According to sources, the Centre has asked Nafed to undertake MSP operations of moong in Karnataka, Tamil Nadu, Telangana, Andhra Pradesh, Maharshtra, Uttar Pradesh, Rajasthan, Haryana and Madhya Pradesh. The procurement has commenced in Karnataka, Tamil Nadu and Rajasthan.
During the period under review, soyabean prices in Manasa mandi of Neemuch, Madhya Pradesh, were 11% lower than its MSP of Rs 3,399/quintal. Soyabean production this year is expected to be 13.46 million tonne, up 23% from 2017-18. Prices of oilseeds like these are linked with global edible oil prices since India imports soyabean oil from Aregentina and Brazil. MSP is only one of the factors that influence the soyabean rates, traders said.
In Karnataka, maize prices were 23% below MSP in Davangere district and ragi prices were down by 24% in Mandya district during the review period. India’s kharif maize production is expected to touch a record 21.47 million tonne this year while ragi is estimated to decline to 1.68 million tonne from 1.98 million tonne last year.
Niger seed was sold at Rs 3,825/quintal (down 35% from MSP) in Dindori district of Madhya Pradesh. Farmers were also selling groundnut at 7% below MSP in Banaskanth, Gujarat, which is the largest producing state in this oilseed crop. The Centre has asked Nafed to procure Niger seeds in Madhya Pradesh and groundnut in Madhya Pradesh, Rajasthan and Uttar Pradesh.
Sunflower was also ruling by 33% below MSP in Karnataka, the largest producer, in the review period. Cotton prices (medium staple) are now ruling slightly above MSP of Rs 5,150/quintal in Hanumangarh in Rajasthan. Market prices of Sesamum were more than double the MSP of Rs 6,249/quintal in Bhavnagar, Gujarat.