Minimum support price for agriculture crops

New Delhi : The policies of Government of India and decision taken in recent years towards farmers’ welfare have resulted insignificant improvement of food grain production and sustained agriculture growth despite COVID-19 pandemic. The Cabinet Committee on Economic Affairs (CCEA) chaired by the Hon’ble Prime Minister Shri Narendra Modi has approved the increase in the Minimum Support Prices (MSP) on 8th September 2021 for all designated Rabi crops for Rabi Marketing Season (RMS) 2022-23, when in advance of the sowing season.

MSP is an integral component of Agriculture Price Policy and it targets to ensure support price to farmers and affordable prices to the consumer.Based on the recommendations of the Commission for Agricultural Costs and Prices (CACP), the Government of India declares MSPafter considering the views of State Governments and Central Ministries/Departments concernedforagricultural cropssuch asCereal, Pulses, Oilseeds and commercial crops every year at the beginning of the sowing season. MSP is announced for the Kharif crops of Paddy, Jowar, Bajara, Ragi,Maize, Arhar, Moong, Urad, Cotton, Groundnut, Sunflower Seed , Soyabean ,Sesamum .The Rabi crops for which MSP is announced are Wheat, Barley, Gram, Masur, Rapeseeds& Mustard, Safflower and Toria. Apart from this, MSP is announced for Copra, De-husked Coconut, Jute and Fair Remunerative Prices (FRP) is announced for Sugarcane.

Normally MSP for Rabi season was announced in October.Last year it was announced on 23rd September and for the year 2022-23 it was further advanced and announced on 8th September 2021.

The factors considered by CACP for fixing MSP include cost of production, domestic and international prices, demand-supply conditions, inter-crop price parity, terms of trade between agricultural and non-agricultural sectors.

The MSP approved for designated Rabi Crops for 2022-23 duringRabi Marketing Season is higher or equal to 1.5 times of cost of production. The expected returns to farmers over their cost of production is estimated to be highest in case of Wheat (100%) and rapeseed/mustard (100%), followed by lentil (79%) and gram (74%); barley (60%); safflower (50%).

Table 1: Minimum Support Prices for mandated Rabi crops for rabi marketing season (RMS) 2022-23:

/quintal

Crop Cost* of production for RMS 2021-22 MSP for RMS 2021-22 Cost* of production for RMS 2022-23 MSP for RMS 2022-23 Increase in MSP for 2022-23

(Absolute)

Return over cost

(in per cent)

Wheat 960 1975 1008 2015 40 100
Barley 971 1600 1019 1635 35 60
Gram 2866 5100 3004 5230 130 74
Lentil 2864 5100 3079 5500 400 79
Rapeseed/ Mustard 2415 4650 2523 5050 400 100
Safflower 3551 5327 3627 5441 114 50

 

 

* Refers to comprehensive cost which includes all paid out costs such as those incurred on account of hired human labour, bullock labour/machine labour, rent paid for leased in land, expenses incurred on use of material inputs like seeds, fertilizers, manure, irrigation charges, depreciation on implements and farm buildings, interest on working capital, diesel/electricity for operation of pump sets etc., miscellaneous expenses and imputed value of family labour.

 

Procurement of agriculture produce of designated crops on MSP to ensure remunerative prices to the farmers is done in collaboration with the State Governments.

Procurement of wheat and Paddy at MSP comes under Schemes implemented by Deptt. of Food & Public Distribution (DFPD) through centralized and de-centralized procurement mechanism. The procured Wheat and Paddy is utilized in distribution under Targeted Public Distribution System (TPDS) and other welfare schemes under National Food Security Act(NFSA).

Procurement of pulses and oilseeds is made at MSP as per the Schemes under PM-AASHA scheme of DA&FW. The procurement of Notified Pulses are done under Price support Scheme (PSS) by the Central Nodal Agencies through State designated Agencies during harvesting season. Since 2015 onward the procurement of Pulses is also done at MSP for maintenance of National Buffer stock of Pulses under Price Stabilization Fund (PSF).

Procurement of Coarse grains is being done as per the existing scheme of Department of Food and Public Distribution.Procurement of Cotton is done at MSP by the Cotton Corporation of India under the Scheme implemented by Ministry of Textiles. The procurement of Copra isalso being done under PSS in the Copra producing States based on the receipt of the proposal as per PSS guideline under PMAASHA.

 

Increased procurement under at MSP During 2020-21 :-

  • As against previous year procurement of 773.45 LMT,over 879 LMTs of paddy procured on MSP for ongoing season for 2020-21 benefitting about 130 Lakh farmers. Around 433.44 LMT wheat was procured for RMS 2021-22, against the last year corresponding purchase of 389.93 LMT, benefitting about 49.20 Lakh farmers.
  • During the cropping year 2020-21 which includes Kharif 2020-21, Rabi 2021 and Summer 2021 season, the Government through its Nodal Agencies has procured 12 LMT of pulses and oilseeds having MSP value of Rs. 6,742 Crores benefitting more than 7 lakhs farmers.
  • During the current year ,a quantity of 91,89,310 cotton bales valuing Rs. 26,719.51 crore has been procured from 18.86 lakhs cotton farmers.

 

Manifold increase in Govt.  Procurement in recent years

Procurement of MSP crops has increased manifold during the recent years. Comparative statement of procurement of major crops during the 2009-10 to 2013-14 and last five years are as under:-

Table 2. Status of increase in procurement through MSP for various crops over the years:

Crop 5 years from 2009-10 to 2013-14 Last 5 Years( 2016-17 to 2020-21) Increase in Times
Qty  in LMT MSP Value (Rs in Crore) Qty.  in LMT MSP Value (Rs in Crore) Qty. MSP Value
Paddy 2,495  2,88,871 3,449 6,02,156      1.38 2.08
Wheat 1,395  1,68,223 1,627 2,85,071      1.17  1.69
Pulses 1.52  645 112.63          56,798   74.18 88.08
Oilseeds 3.65 1,454 59.20 26,503 16.22 18.23
Cotton * 29.15 5821 211.65 59,094 7.26 10.15

 

Procurement operations under MSPcontinued despite disruptions in logistic activities during the initial days of lock down in wake of COVID pandemic.Number of procurement centers were increased as compared to previous years to facilitate the farmers for selling their produce at the nearest procurement centre maintaining COVID protocols.

During RMS 2021-22,a new chapter has been added in the history of procurement of foodgrains when the states of Haryana and Punjab also switched from indirect payment of MSP to direct online transfer to farmers’ bank account. DBT of MSP has brought in transparency and real time monitoring of the procurement operations.

Central Government is committed to continue the MSP operations to ensure remunerative prices to the farmers.