Hike in MSP for kharif crops

The Indian government has approved the Minimum Support Price (MSP) for kharif crops for the 2023-24 season, aiming to provide fair remuneration to farmers.

However, concerns have been raised by farmers’ organisations regarding the increase not keeping up with rising input costs.

Minimum Support Price (MSP)

About

MSP is a form of market intervention (a policy decision not enforceable by law) by the Government of India to insure agricultural producers against any sharp fall in farm prices during bumper production years.
Basically, MSPs are support prices announced by the government (and sometimes state governments add a bonus amount to them).

Background

In 1964, Lal Bahadur Shastri formed the Food Grain Price Committee (under LK Jha), to push for a MSP regime.
The first MSP announcement was made in 1967.
Later, the government set up the Agricultural Prices Commission (renamed as the Commission for Agricultural Costs and Prices (CACP) in 1985) for fixing MSP for crops.

Announced by

Cabinet Committee on Economic Affairs (Chaired by the Prime Minister of India) on the basis of the recommendations of the CACP at the beginning of the sowing season for certain crops.
Crops Covered
- Government announces MSPs for 22 mandated crops and fair and remunerative price (FRP) for sugarcane (total 23).
- The mandated crops are 14 crops of the kharif (summer sowing) season, 6 rabi crops (Wheat, Barley, Gram, Masur (Lentil), Rapeseed & Mustard, Safflower) and two other commercial crops.

Why do MSPs matter?

Safety net for farmers

As a farmer, one is worried each season because one does not know what one’s harvest will fetch. Also, a farmer has little bargaining power in the market.
If the market prices are below the farmer’s cost of production they and their families can be ruined.
By announcing MSPs, the government makes a promise that it will buy (called procurement) from farmers at the announced prices.

Read also:- The Art and Science of Agriculture

To protect consumers

If one particular crop, say cotton, led to the ruin of many farmers, then farmers will avoid growing cotton next season.
This, in turn, will reduce supply and push up prices. Higher prices will then show up across the different products for consumers.

To tweak the production pattern

If the government wants to incentivise the production of pulses, as against paddy (rice), then it can give a relatively higher hike in MSP of pulses than the MSPs for paddy.

What is the MSP for Kharif Crops for 2023-24?

The Centre claimed that the hike in MSP for kharif crops for 2023-24 is in line with the Union Budget 2018-19 announcement of fixing the MSP at a level of at least 1.5 times the All-India weighted average cost of production.
- The MSP has been hiked for all 14 kharif crops in the range of 5.3 to 10.35 %. In absolute terms, it has been increased by Rs 128 to Rs 805 per quintal.
- Green gram (moong) got the highest hike of 10.4% over 2022-23 followed by sesamum that saw an increase of 10.3%.

Read also:- Indian Agriculture Scenario