A positive impact of the lower crop prices is that the NDA government has managed to more or less contain the food price inflation (though these have recently risen partly due to seasonal factors and unfavourable base), unlike in the UPA regime, which saw inflation skyrocketing.
Market rates of most farm commodities in the major trading hubs (mandis) are ruling below minimum support prices set by the government, a reason why the rural distress is persisting despite the past couple of years’ bumper crops and reasonable hike in MSPs. According to data furnished by Agmarknet and e-NAM portal, farmers are getting the MSPs or higher prices only for two crops — soyabean and cotton — out of 15 major cereals, pulses and oilseeds (see table). A positive impact of the lower crop prices is that the NDA government has managed to more or less contain the food price inflation (though these have recently risen partly due to seasonal factors and unfavourable base), unlike in the UPA regime, which saw inflation skyrocketing. The retail food inflation was 4.96% in December 2017 against 4.35% in November. Farmers may not be getting prices as remunerative as their expectations, but in many places the rates are not bad either, said a government official.
Since the crop prices have a direct link with food inflation, what the government could practically do to help farmers is to take pro-active actions including bonus payments and stepping up procurement to push up prices where the problem is more acute for the farmers, he added, requesting anonymity. The official cited the increase in pulses production in recent seasons was made possible after the government started procurement at assured prices. “Even though in case of many pulses, the market prices are lower than respective MSPs, this has not affected the sowing decision of the farmers,” he said.
The pulses acreage in this rabi season has gone up to 161 lakh hectares as on January 12 from 154 lakh hectares in the year-ago period, data released by the government showed. The sowing areas of chana and masur, two major pulses grown in rabi season, are higher than their corresponding period last year. The current market price of chana, the major pulse crop, is Rs 3,871/quintal in Bikaner, Rajasthan as on January 10 as against its MSP of Rs 4,400/quintal. Similarly, another rabi pulse masur is ruling low at Rs 3,000/quintal as against MSP of Rs 4,250/quintal.
The areas under wheat has been increasing every week and the government is confident of same level of acreage as last year, by end of the sowing season. The planting of wheat in Gujarat, where it has ended, is reported at 10.50 lakh hectares as against 9.75 lakh hectares in the year-ago period. The sowing of wheat still continues in other states. The wheat price at Khanna mandi in Punjab reported at Rs 1,725/quintal as against the MSP of Rs 1,735/quintal. The government is considering various options how to ensure MSPs to farmers, but the Centre wants other states to follow the Madhya Pradesh model in compensating the farmers by paying the differential amount if market rates fall below their MSPs. Haryana government has also decided to implement the price differential compensation to farmers. The Telangana government last week announced to pay Rs 4,000 per acre to farmers as input assistance under a direct benefit transfer scheme for which the state has to spend about Rs 12,000 crore.