The value of the government’s procurement of agricultural crops including paddy, wheat, pulses, oilseeds, cotton and copra under the minimum support price (MSP) has witnessed an average annual growth of around 2.89% in the last five years, according to data submitted to Parliament by the agriculture ministry.
The government procured 117 million tonne (MT) of agri-commodities at MSP valued at Rs 3.33 lakh crore in 2024-25 season from farmers, against purchase of 136 MT valued at Rs 2.91 lakh crore in 2020-21 season.
However, the value of MSP purchase of crops in 2024-25 rose by over 26% from Rs 2.63 lakh crore in previous year indicating higher purchase of wheat, oilseeds and pulses.
Market prices impacted MSP volume for key crops
Officials said agri-commodities purchased under the Price Support Scheme (PSS) dropped during three years – 2023-24, 2022-23 and 2021-22 from 202-21 level because prices of crops such as pulses and oilseeds ruled above the MSP leading to lower volume of lifting.
In 2023-24, 16.8 million farmers got the benefit of MSP purchase, according to the official data.
Since 2018-19, the government has initiated a new policy on fixing minium support price (MSP) which ensures 50% profits over computed cost of production.
Officials said that since 2018-19, the MSP of all mandated kharif, rabi and other commercial crops with a minimum return of 50% over all India weighted average cost of production. In 2019-20, 122 MT of agri-commodities were purchased under the MSP regime.
Procurement limits apply to select crops
“Government offers to procure agricultural crops through designated procurement agencies and farmers have the option to sell their produce to the government agencies or in the open market whichever is advantageous to them,” according to a statement by the agriculture ministry in the Lok Sabha on Tuesday.
The government announced MSP of 22 crops – paddy, wheat, oilseeds, pulses, cotton and copra based on the recommendation of commission for agricultural costs and prices and inputs from states and other ministries.
While the Food Corporation of India in collaboration with state agencies buy paddy and wheat at MSP for ensuring supplies under public distribution system and keeping adequate stock under buffer, agencies including Nafed and NCCF mostly buy oilseeds and pulses at MSP when market prices fall below the MSP.
The overall quantity of procurement by the government for oilseeds and pulse are restricted to 25% of the produce of that particular season.
In addition Cotton Corporation of India and Jute Corporation of India carry out MSP purchase while there is no maximum quantity purchase limit of these two commercial crops.