In the case of wheat, the key winter cereal, the new MSP will be Rs 2,015/quintal, up Rs 40 or just 2% over last year. This is a lower increase compared to several immediate past years.
The Cabinet Committee
on Economic Affairs (CCEA) on Wednesday approved rather modest 2-9% increases
in the minimum support prices (MSPs) of crops to be grown during the rabi
season starting from October 1. The expectations of a bumper winter crop have
brightened, given the forecast of abundant rains this month, which might lead
to improved soil moisture conditions.
The increase will
ensure remunerative prices to the growers for their produce while the prices
have been fixed with the aim to encourage crop diversification, the agriculture
ministry said in a statement.
The highest increase
in MSP over the previous year has been decided for lentil (masur) and mustard
(7.8% and 8.6% respectively or Rs 400/quintal each). In case of safflower, an
increase of Rs 114/quintal or 2.1% from last year has been announced. The
differential remuneration is aimed at encouraging crop diversification, the
ministry said.
In the case of wheat,
the key winter cereal, the new MSP will be Rs 2,015/quintal, up Rs 40 or just
2% over last year. This is a lower increase compared to several immediate past
years.
This is significant
since the government is grappled with higher production of the grain and
consequent pressure on procurement. The country had record 109.5 million tonne
(MT) of wheat production during 2020-21 (July-June). This year’s target is set
at 110 MT.
Of course, all MSPs
are in keeping with the principle of these prices being at least 150% of the
production cost (A2+FL).
“Concerted efforts
were made over the last few years to realign the MSPs in favour of oilseeds,
pulses and coarse cereals to encourage farmers shift to larger area under these
crops and adopt best technologies and farm practices, to correct demand-supply
imbalance,” the ministry said. The rabi MSP announcement for 2021-22 crop year
has been further advanced by two weeks from previous year.
India Meteorological
Department (IMD) has already predicted above-normal rains for September,
quantitatively 115% of the long-period average (LPA). So far, the rainfall was
115% of LPA in September and further wet spell in next one week as predicted
may be helpful for rabi crops as sowing is set to commence from next month.
MSPs of rabi crops are
declared usually announced in October or November, but last year it was announced
a month earlier on September 21, probably to re-assure farmers about the
government’s commitment on continuing the system of benchmark price system amid
the farmers’ protests against the contentious farm laws.
Robust production
doesn’t necessarily boost farmers’ earnings and farm-gate price is one of the
major factors to boost the gross value added (GVA) in agriculture. In the case
of many crops, including oilseeds and pulses, the procurement levels are
crucial to influence the mandi prices, unless there is a decline in production.
The Centre has spent
over Rs 85,000 crore for procuring record 43.3 MT of wheat grown during 2020-21
crop year and this is 11% higher than its previous year. Every year the
procurement has been increasing while the annual demand of wheat under the
National Food Security Act (NFSA) is 25-30 MT. The Central Pool had 56.5 MT of
wheat as on August 1, more than double of buffer norm of 27.6 MT for
July-September.
The price support
scheme sans procurement doesn’t seem to be working on the ground. Although the
government purchases have increased in last five years compared to previous
five years, the benefits of MSPs are limited mostly to paddy, wheat farmers in
Punjab, Haryana and Madhya Pradesh. For the first time last year, the FCI had
purchased sizable quantity of paddy in Telangana and Andhra Pradesh. During
2020-21, the Centre had procured nearly 1.2 MT of pulses and oilseeds, which is
less than 2% of their combined output of 61.8 MT. In contrast, paddy and wheat
procurement was 48% and 40%, respectively against production.
As per official data,
the agriculture and allied sector remained one of the brightest spots in FY21,
with 3.6% growth in gross value added (GVA) in real term even on a relatively
unfavourable base (the farm sector GVA grew as much as 4.3% in FY20). The
positive trend continues as this sector remained largely insulated from the
Covid shocks and grew as much as 4.5% in Q1FY22, against 3.5% a year before.
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