Hiking MSP for Rabi crops a step in the right direction

Several key persons connected with agriculture in India have been talking of ways and means to improve crop production of agricultural commodities like pulses and edible oils in which India remains heavily dependent on imports. They have been giving the example of remarkable growth output achieved in the sugarcane production to argue that if such growth in output can be achieved in one crop, it can very well be achieved in other crops as well.

In this regard, some overzealous ‘experts’ came with several ideas including inter-cropping of oilseeds with other oilseeds in the agricultural land as a solution to enhance production. They even went ahead with planning out steps to educate the farmers about future benefits that can be derived from inter-cropping.

In the last TPCI newsletter (Vol. I, Issue 7 dated November 1, 2018), we had argued whether these steps alone will lead to enhanced production, on the lines of success achieved in sugar output. We concluded that “there is more sugar production because the purchase price of sugarcane is much higher than any other crop. A farmer gets 50-60% more remuneration on sowing sugarcane than most other crops… Therefore, in order to make farmers sow a particular crop, the purchase price of that crop will have to be increased.” There were few other reasons cited but the purchase price, as perceived by TPCI’s research team, was the chief reason why farmers were reluctant to sow certain crops. Out write-up had said: “Sugarcane has an assured buyer which is not the case with other crops. Farmer has to go to mandis to sell his crop where at most times he does not even get the minimum fixed price. With FRP being fixed in case of sugarcane, the farmer is sure he will get the assured price.”

As if taking cue, the Narendra Modi government has taken a very commendable step of approving a proposal to hike the minimum support price (MSP) for Rabi crops. The government has announced a 6 percent hike in wheat support price to Rs. 1,840 per quintal and up to 21 percent increase in other Rabi crops, a move that will give farmers Rs. 62,635 crore additional income and help contain the unease that was prevailing among them over high input cost and low returns.

Few months back, the government had announced higher MSP for Kharif (summer) crops, to fulfill its promise of giving farmers 50 percent more price than their cost of production. MSP is a price at which the government buys crops from the farmers. The farm advisory body Commission for Agricultural Costs and Prices (CACP), which works under the Ministry of Agriculture, determines MSP for some 25 agriculture commodities ahead of the Kharif and Rabi seasons every year. According to agriculture minister Radha Mohan Singh, the MSPs for all Rabi crops are now higher than the cost of production ranging from 50-112 percent.

As per the new CCEA approved MSP, wheat MSP has been raised to Rs. 1840 for Rabi season of 2018-19 crop year, which is a Rs. 105 per quintal hike. Likewise, barley MSP has been raised to Rs. 1440 per quintal, a hike of Rs. 30 per quintal, while that of gram (chana) has been raised by Rs. 220 per quintal to Rs. 4620 per quintal. Masur’s MSP has been raised to Rs. 4475 per quintal, a hike of Rs. 225 per quintal while rapeseed/mustard MSP has been raised to Rs. 4200 per quintal, a hike of Rs. 200 per quintal and safflower MSP has been increased to Rs. 4945 per quintal, a hike of Rs. 845 per quintal.

The farmer will now be getting a return of 112.5 percent per quintal on wheat, since his production cost has been calculated to Rs. 866 per quintal. In case of gram, the MSP is higher by 75 percent than the cost of production while mustard MSP is now nearly 90 percent more than the cost of production. For barley, return will be 67.4 per cent on the production cost of Rs. 869 per quintal and in case of safflower the return will be 50 percent higher than the production cost.

This significant increase is a welcome step by the government as it will reduce the distress on the farmers sowing these crops. It is now time to put in a mechanism where the farmer actually gets the full amount fixed by the government.