Start of Season: Most summer crops being sold below support prices

Kharif season, Kharif foodgrains, Kharif foodgrains production, Agri Min Narendra Singh Tomar, new farm laws, covid19 pandemicStarting from kharif 2018, it was decided to keep MSPs at 1.5 times their costs (A2+FL) for the 14 kharif crops, for which the government fixes MSPs every year.

By Prabhudatta Mishra
Mandi prices of seven among the 10 key summer-sown crops are ruling below their minimum support prices (MSPs), indicating that procurement by the designated agencies hasn’t yet gathered momentum. Kharif harvesting season started a fortnight ago.

An analysis of prices by FE showed that farmers sold seven kharif crops including jowar, bajra, maize, moong and soyabean at prices 8-38% below their MSPs during October 1-15. Only arhar and urad are costlier to wholesalers than their MSPs, while the rate for paddy is closer to the MSP.

Starting from kharif 2018, it was decided to keep MSPs at 1.5 times their costs (A2+FL) for the 14 kharif crops, for which the government fixes MSPs every year.

While the MSP hike was in the range of 4-52% (y-o-y) in kharif 2018, it was raised in 2-7% this season. Mandi prices ruling below MSPs, particularly in the harvesting period when farmers bring their crops in hordes is not new as 12 monsoon-sown crops were 7-43% below their benchmark rates in 2018 while 11 were 8-37% ruled below MSPs last year in the first month of the season.

However, the prices being lower than MSPs may further fuel the agitations by farmers against new farm laws, particularly in the northern region. The government’s attempt to re-assure the farming community that the official procurement will stay hasn’t been very effective in quelling the protests so far.

After advancing procurement by a few days from the normal schedule of October 1, the Centre has purchased 62.42 lakh tonne of paddy (worth Rs 11,786 crore at MSPs) until October 14, which is more than the double the level a year ago. The aggressive purchase by the government is the main reason for mandi prices of paddy ruling at MSP level.

On the other hand, even though 41.67 lakh tonne of oilseeds and pulses are approved for purchase, the total procurement was only 687 tonne comprising moong and urad from Tamil Nadu, Maharashtra and Haryana, until Friday.

Rolling out a package of price deficiency support schemes for agricultural crops, the government had announced an extra Budget outlay of over Rs 15,000 crore for procurement of non-National Food Security Act (NFSA) crops during the 2018-19 crop year (July-June). It also enhanced the government guarantee for Nafed to undertake procurement of pulses and oilseeds by Rs 16,550 crore to Rs 45,450 crore.

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