The MSP for paddy was fixed at Rs 2,183/quintal for the last kharif season, which was up 7% on year.
The Cabinet on Wednesday approved increases in the range of 1.4-12.7% in the minimum support prices (MSP) of 14 crops for the 2024-25 kharif season (July-June), but raised the support price for paddy, the key summer crop, by a relatively modest 5.35% to Rs 2,300/quintal.
The MSP for paddy was fixed at Rs 2,183/quintal for the last kharif season, which was up 7% on year.
With a huge surplus of rice stocks at the central pool, the government is aiming to give a signal to farmers to diversify to more remunerative pulses and oilseeds especially in Punjab and Haryana.
Rice stocks at the central pool as on June 1 was 31.98 MT. Effectively, FCI holds 50.08 million tonne (MT) — including 18.12 MT of grain receivable from millers, four times above the buffer of 13.54 MT for July 1.
The MSP for moong for 2024-25 season will be Rs 8,682/quintal, up 1.4%. Tur/Arhar MSP will be up 7.9% on year at Rs 7,550/quintal.The support price for groundnut and soybean, key oilseeds grown in kharif season have been increased by 6.4% and 6.3% on year to 6,783/quintal and Rs 4,892/quintal, respectively.
The latest Cabinet decisions are part of the concerted efforts being made over the last few years to realign the MSP in favour of oilseeds, pulses and coarse cereals to encourage farmers to bring larger areas under these crops, and correct demand-supply imbalance.
In 2018-19, the government adopted the policy of MSPs to ensure at least 50% profits over computed cost of production of crops. In that year, MSP hikes for kharif crops were in highest in the range of 4.1-28.1%.
The higher MSPs for pulses and oilseeds will drive the gross value added (GVA) in “agriculture and allied services” in the second half of the current year, as procurement begins in October. Agri GVA grew 1.4% in FY24, the slowest since FY19 as below-normal monsoon rainfall in 2023 affected key crop output. Elevated MSPs, backed by procurement, could potentially boost rural income and purchasing power.
“Due to today’s decision, farmers will get Rs 2 trillion by way of MSP, which is Rs 35,000 crore more than the previous season,” information and broascasting minister Ashwini Vaishnaw said.
Of course, the MSP purchases are more robust for paddy and wheat, than for other crops like oil seeds and pulses. India imports about 56% of its total domestic requirement of edible oil while 15% of pulses consumption is met through imports.
The MSP for medium staple variety of cotton, a major cash crop grown in the kharif season, has been raised by 7.6% in 2024-25 season to Rs 7,121/quintal. The MSP of other cereals such as maize, bajra, ragi and jowar has been hiked by 5-11.5% for the next sowing season.
The cost of production for computation of MSP includes all paid-out costs directly incurred by the farmer — in cash and kind — on seeds, fertilisers, pesticides, hired labour, leased-in land, fuel and irrigation and an imputed value of unpaid family labour.
The expected margin to farmers over their cost of production in 2024-25 are estimated to be highest in case of bajra (77%) followed by tur (59%), maize (54%) and urad (52%). For rest of the crops, margin to farmers over their cost of production is estimated to be at 50%.
Source:financialexpress.com