Friday, February 22, 2019


Govt gives nod to hike kharif MSP; Moong MSP up by Rs 1,400 per quintal
Friday, 06 July, 2018, 08 : 00 AM [IST]
Ashwani Maindola, New Delhi
The Cabinet Committee on Economic Affairs, chaired by Prime Minister Narendra Modi, has approved the hike in the minimum support price (MSP) for kharif crops for the 2018-19 season. While the MSP of moong increased by Rs 1,400 per quintal, that of sunflower increased by Rs 1,288 per quintal, that of ragi increased by Rs 997 per quintal, and that of common paddy increased by Rs 200 per quintal. The hike was termed a major boost to increasing the farmers’ incomes.

The price of rice was fixed at Rs 1,750. For jowar, it was fixed at Rs 2,430 for the hybrid and Rs 2,450 for the Maldandi variety. For bajra, it was fixed at Rs 1,950; for ragi, it was fixed at Rs 2,897; for maize, it was fixed at Rs 1,700; for arhar (tur dal), it was fixed at Rs 5,675; for moong, it was fixed at Rs 5,575, and for urad, it was fixed at Rs 5,600.

For oilseeds, including groundnut, the price was fixed at Rs 4,890; for sunflower seeds, it was fixed at Rs 5,388; for soybean, it was fixed at Rs 3,399; for seasmum, it was fixed at Rs 6,249, and for nigerseed, it was fixed at Rs 5,877 per quintal.

The government, in a statement, said that it had fulfilled the promise of giving MSP at 150 per cent of  the input cost announced in the Budget 2018-19. The statement added that the Commission for Agricultural Costs and Prices (CACP) had recommended MSPs for all kharif crops broadly in line with the announced principle.

On the increment in the prices for oilseeds, Atul Chaturvedi, president, Solvent Extractors’ Association, said that it was a historic decision, as the MSP was fixed at a level of at least 150 per cent of the cost of production and will give the major boost to the farmers’ incomes.

“This is a welcome step and will support the domestic oilseed farmers to sustain their interest in cultivation of the oilseeds. This will help the country to check and reduce its dependence on imported oils. Currently, India's import of edible oil has touched 70 per cent of the requirement and is a matter of food security,” he added.

Chaturvedi, however, cautioned that the Government must ensure the domestic price of edible oils remain at such a level by keeping import duty at the appropriate level, so that same is translated into remunerative price for the farmers and the industry is able to buy at MSP or above, and the Government does not have to step in for buying.

He added, “While the hike in MSP will encourage the farmers to produce more oilseeds, it is also necessary that MSP is linked with the productivity, to ensure higher returns per hectare to the farmers. Also there is a need to incentivise farmers from Punjab and Haryana to move from grains to oilseeds by offering higher MSP on the oilseeds grown in that area.”

However, many market agencies fear this could lead to inflation, as the higher MSP would put a fiscal burden on the Union government.

On the subject of hike in MSP, Dharmakirti Joshi, chief economist, CRISIL, said, “The MSPs for this year’s kharif crops are 50-97 per cent higher than the A2+FL prices, and 4-52 per cent more than last year. The weighted average MSP increase (crop weights being the quantity procured last year) comes to about 13 per cent.”

“Assuming the procurement of kharif crops would be as much as last year, the higher MSPs would cost the government about Rs 11,500 crore,” he added.

“But the actual cost incurred could be substantially higher as procurement is set to increase. Where a crop is not procured, the government may have to make deficiency payments to farmers, which is the difference between the MSP and market/mandi price. Currently, the market/mandi prices for most crops are below their announced MSPs,” Joshi said.

Meanwhile, the government has set up a buffer stock of pulses and domestic procurement of pulses is also being done under the Price Stabilisation Fund (PSF), mainly with a view to protect consumers.

Further, it is also trying to work on means and ways to ensure that the farmers get the announced MSP. For this, it stated that it was essential that if the price of the agriculture produce market is less than the MSP, it should either purchase at MSP or work in a manner to provide MSP for the farmers through some other mechanism.

“NITI Aayog, in consultation with the Central and state governments, will put in place a foolproof mechanism, so that farmers will get adequate price for their produce,” the government’s statement read.

Amongst cereals and nutri-cereals, in terms of absolute increase, the MSP of paddy (common) was raised by Rs 200 per quintal, jowar (hybrid) by Rs 730 per quintal and ragi by Rs 997 per quintal.

The highest percentage increase in MSP over the previous year is for ragi (52.47 per cent), followed by jowar hybrid (42.94 per cent).

For pulses, apart from moong, the MSP of arhar (tur) has been raised by Rs 225 per quintal, yielding a return over cost by 65.36 per cent, and urad by Rs 200 per quintal, with a return over cost by 62.89 per cent, in order to maintain inter-crop-price parity.

Similarly, the MSP of bajra has been raised by Rs 525 per quintal, yielding a return of 96.97 per cent over cost.

Ajay Kakra, leader, food and agriculture, PwC India, said, “The move to hike MSP is a welcome move for farming community. This will create a balance by shifting the focus from paddy growing states to states growing millets, oilseeds and pulses.”

“The Government has taken a step further to stabilise market prices for millets, pulses and oilseeds. The MSP hike is over 20 per cent for 10 commodities which will motivate farmers to continue growing these commodities profitably,” he added.

“Given the severe climate change factors, the move should also be accompanied with crop insurance plans to hedge the farmers’ risk,” Kakra said.
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