Centre hikes MSP for paddy, other kharif crops: What it is, how it is decided and what it means for farmers

 The government on Wednesday hiked the minimum support price (MSP) for paddy by Rs 100 to Rs 2,040 per quintal for 2022-23 crop year in order to encourage farmers to bring more area under the crop and boost their income.

The Cabinet Committee on Economic Affairs (CCEA), chaired by Prime Minister Narendra Modi, approved the increase in MSPs for all 14 kharif (summer) crops for 2022-23 crop year.

“Government has increased the MSP of kharif crops for 2022-23, to ensure remunerative prices to the growers for their produce and to encourage crop diversification,” an official statement said.

Briefing media, Information and Broadcasting Minister Anurag Thakur said the Modi government has taken several steps from ‘beej se bazaar tak’ (seed to market) that has helped increase income of farmers.

Announcing the MSP hike before the sowing of kharif crops will give farmers an indication about the price which they would get and help them in deciding which crops to grow, Thakur added.

But what is MSP? How is it decided and what does it mean for farmers? Let’s take a closer look:

What is it?

Simply put, it is the minimum price set by the government at which farmers can expect to sell their crop. It is also the price that government agencies pay when procuring the crop.

What about the support bit?

When the crop price falls below market levels, the government steps in to buy the crop. The support bit thus helps farmers recoup their costs and hopefully even make some profit.

As per Business Standard, MSP ensures a profit of at least 50 per cent over the cost of production for the farmers. Moreover, if the farmers get favourable terms to sell their produce or better price than MSP, they are free to sell to non-government parties.

It is essentially a backstop that ensures support for farmers and affordable prices for consumers.

Which crops are supported by the Centre?

Twenty-three commodities make the list:

• Seven cereals (paddy, wheat, maize, bajra, jowar, ragi and barley)
• Five pulses (chana, arhar/tur, urad, moong and masur)
• Seven oilseeds (rapeseed-mustard, groundnut, soyabean, sunflower, sesamum, safflower and nigerseed)
• Four commercial crops (cotton, sugarcane, copra and raw jute).

How is it fixed?

As per Business Standard, the Centre determines MSP based on the recommendations of the Commission for Agricultural Costs and Prices (CACP) as well as taking into account the views of state governments and Central Ministries/Departments concerned for agricultural crops such as cereal, pulses, oilseeds and commercial crops every year at the beginning of the rabi and kharif crop seasons.

The CACP considers cost of production, domestic and international prices, demand-supply conditions, inter-crop price parity and the terms of trade between agricultural and non-agricultural sectors while making its recommendation, as per the report.

When was it first introduced?

As per Indian Express, MSP was introduced in the mid-1960s at a time when India was food-deficit. The genesis of the idea came after the Centre, which wanted to boost domestic production through Green Revolution tech, realised farmers needed a minimum price guarantee before they would commit to planting input intensive but high-yielding wheat or paddy.

What are the revised prices?

As per the CCEA decision, the MSP of 14 kharif crops has been increased in the range of Rs 92-523 per quintal. The maximum hike has been given in sesamum of Rs 523 per quintal, while the lowest Rs 92 per quintal is in case of maize.

The MSP of paddy and bajra has been increased by Rs 100 per quintal, while tur, urad and groundnut MSP has been hiked by Rs 300 per quintal each for 2022-23 crop year.

The MSP of common grade variety of paddy has been increased to Rs 2,040 per quintal for 2022-23 crop year from Rs 1,940 per quintal in the previous year.

The support price for ‘A’ grade variety of paddy has been increased to Rs 2,060 per quintal from Rs 1,960.

Paddy is the main kharif crop, the sowing of which has already begun and the Met Department has projected normal monsoon for the June-September period.

Among commercial crops, the MSP of cotton has been raised to Rs 6,080 for medium staple variety from Rs 5,726 per quintal last year, while MSP for long staple variety of cotton has been increased to Rs 6,380 per quintal from Rs 6,025 per quintal.

In pulses category, the MSP of tur (arhar) has been increased to Rs 6,600 per quintal from Rs 6,300 last year, while that of moong raised to Rs 7,755 per quintal from Rs 7,275.

The MSP of urad has been increased to Rs 6,600 per quintal for 2022-23 crop year, as against Rs 6,300 per quintal last year.

Among oilseeds, MSP of soyabean has been increased to Rs 4,300 per quintal from Rs 3,950 last year, while for sunflower seed, support price has been raised to Rs 6,400 per quintal from Rs 6,015.

Groundnut support price has been increased to Rs 5,850 per quintal from Rs 5,550 per quintal last year, while seasamum MSP has been increased to Rs 7,830 per quintal from Rs 7,307.

Nigerseed MSP has been increased to Rs 7,287 per quintal in 2022-23 from Rs 6,930 per quintal last year.

In coarse cereals, the MSP of maize has been increased to Rs 1,962 per quintal from Rs 1,870 last year, while for ragi, support price now is Rs 3,578 per quintal as against Rs 3,377 last year.

In case of bajra, the MSP has been increased to 2,350 per quintal, from Rs 2,250 per quintal.

The MSP of jowar (hybrid) has been increased to Rs 2,970 per quintal in 2022-23 from Rs 2,738 per quintal, while for jowar (maldani), support price has been increased to Rs 2,990 per quintal from Rs 2,758.

Industry gives thumb-up, farmer activists disappointed

Industry activists gave the announcement a thumbs-up.

Speaking to Indian Express, Suresh Nagpal, chairman, COOIT (Central Organisation for Oil Industry & Trade) called the hike in MSP of oilseeds “a step in the right direction.”

“As farmers get a secured price for their crops, it will encourage more and more farmers to grow oilseeds as well as prompt them to shift away from grains. The area under oil seed cultivation has been on a steady rise over the last few years and with today’s rise, we expect it to rise further. As a result of secured price (MSP) provided by the government, the cultivation of mustard seed reached 91.44 lakh hectares during the last rabi crop season. Needless to say, it will benefit farmers, customers and other stakeholders as a whole,” Nagpal said.

Kalyan Goswami, Director General, Agro Chem Federation of India, told IANS: “The rise in MSPs of commodities such as oilseeds, pulses, nutri-cereals, and cotton has been higher than for paddy. This would encourage farmers to reduce the cultivation of water-intensive crops and would motivate for crop diversification. This would also help to reduce the import of oilseeds and pulses.”

But farmer activists expressed disappointment.

Yogendra Yadav, founder of the Jai Kisan Andolan –one of the 40-odd farmers’ organisations that were part of the consortium Samyukt Kisan Morcha that took on the government against the now repealed three farms laws – said the inflation outlook for 2022-23 has been revised up to 6.7 per cent, from 5.7 per cent that the RBI had forecast earlier. The input cost,  for diesel and fertilisers,  has increased exponentially.

“If we compare the input cost to the revised inflation rate, then it is clear that the MSP announced for the 11 crops out of 14 is less than that, which clearly means that actually, MSP has been reduced for 11 crops.

“Modi government, instead of doubling farmers’ income, is working to reduce their income,” Yadav claimed.

With inputs from agencies

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